Key factors for investing in Vietnam’s industrial parks

Investing in industrial parks in Vietnam is becoming an attractive opportunity for both domestic and foreign investors, thanks to the strong economic growth, preferential policies, and significant potential for manufacturing and export development. However, to achieve high investment efficiency, investors need to consider several key factors such as choosing the right location, understanding policies and legal frameworks, and keeping up with industry development trends. These factors help optimize profits and minimize risks when entering this promising but also challenging market.

Policies and legal framework related to industrial parks

One of the most crucial factors when investing in industrial parks is understanding policies and legal regulations. In Vietnam, mastering the laws and regulations on land, taxes, and government support helps investors avoid potential risks.

Tax incentives and government support

• Corporate income tax (CIT) incentives: Industrial parks in Vietnam, particularly those in the central and northern provinces, often offer tax incentives such as tax exemptions for a certain period or reduced tax rates. This helps businesses save costs, improve profits, and reinvest in production activities.

• Infrastructure support: The government also encourages infrastructure development, creating synchronized industrial parks with electricity, water, and transportation systems, facilitating smooth operations for investors.

Land and investment regulations

Leasing land in industrial parks requires careful consideration. Well-planned industrial zones ensure land value stability and prevent future land shortages.

Transportation infrastructure and logistics connectivity

Transportation infrastructure not only affects operational costs but also determines the efficiency of connecting products and raw materials to domestic and international markets. When investing in industrial parks, investors should consider:

Seaports, airports, and highways

• Seaports: Industrial parks near major seaports like Hai Phong Port and Cai Mep – Thi Vai Port help businesses reduce transportation costs for import-export goods, especially for export-oriented manufacturers.

• International airports: Industrial zones near major airports like Noi Bai (Hanoi) and Tan Son Nhat (Ho Chi Minh City) allow businesses to connect easily with international partners, minimizing time and logistics costs.

• Road and rail systems: Industrial parks in Vietnam are also supported by road and rail transport infrastructure, particularly in key economic areas in the north and south, enabling smooth connections with other provinces and domestic markets.

Quality of workforce

Vietnam has a young, abundant workforce with relatively low labor costs compared to many countries in the region. However, workforce quality is a crucial factor in investment decisions.

Training and workforce development

Although Vietnam has a large labor force, to meet high-tech manufacturing requirements, investors should focus on workforce training and collaborate with universities and vocational training centers to enhance worker skills.

Some industrial parks are also developing on-site training centers to improve labor quality and reduce dependence on external workforce sources.

Living environment and workplace safety

The living and working environment of workers in industrial parks is crucial, as it directly impacts labor productivity and workforce retention.

Social infrastructure system

Investors should prioritize building worker housing, social amenities such as hospitals, schools, markets, and entertainment areas to create an ideal living environment for employees. This improves workers’ quality of life and encourages long-term commitment to companies.

Forms of investment incentives from the government

Import tax exemptions

Businesses investing in projects in Vietnam are exempt from import taxes on goods used for fixed asset creation, as well as raw materials, supplies, and components for project execution. This is a significant incentive that reduces input costs for businesses, particularly those requiring imported machinery, modern equipment, or high-value materials and components for production.

Land lease exemptions and reductions

Another important incentive is the exemption or reduction of land lease fees, land use fees, and land use taxes for investment projects in industrial parks. Particularly, investors are exempt from land lease fees for areas designated for common infrastructure within industrial zones, reducing costs for businesses developing production and business projects. This policy is particularly meaningful for new industrial zones, attracting both domestic and foreign enterprises.

Corporate income tax incentives

The government applies lower corporate income tax rates than the standard rates for businesses executing investment projects. This policy can apply for a specific period or throughout the project’s duration, depending on the project type and investment sector. Reducing corporate income tax is a crucial measure to encourage business reinvestment and development while enhancing competitiveness in the global market.

Deductible reasonable expenses

Investment-related costs, including construction, operation, or rental of worker housing, along with social infrastructure for workers in industrial parks, are considered deductible expenses when calculating taxable income. This reduces financial burdens for businesses in building necessary production and living facilities for workers, facilitating industrial park and investment project development.

Two-year tax exemption and four-year tax reduction

The government offers a two-year corporate income tax exemption and a 50% reduction for the following four years for businesses launching new investment projects in industrial parks. This tax relief helps businesses reduce costs during the initial operation phase, providing additional capital for expansion and competitiveness enhancement. However, industrial parks in economically developed areas are not eligible for this incentive, ensuring fair development among industrial zones and encouraging investment in areas with underdeveloped infrastructure.

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