Vietnam: From May 1, 2024, what are the conditions for establishment or expansion of an industrial cluster from May 1, 2024 under Decree 32/2024/ND-CP?

Main Content

• What are the conditions for establishment or expansion of an industrial cluster in Vietnam from May 1, 2024 under Decree 32/2024/ND-CP?
• What does the application for establishment or expansion of an industrial cluster in Vietnam include?
• What is the formulation of the Industrial cluster development plan in Vietnam about?

What are the conditions for establishment or expansion of an industrial cluster in Vietnam from May 1, 2024 under Decree 32/2024/ND-CP?

Under Article 8 of Decree 32/2024/ND-CP regulating conditions for establishment or expansion of an industrial cluster:

Conditions for establishment or expansion of an industrial cluster

1. The following conditions must be met when establishing an industrial cluster:

a) The industrial cluster is on the List of industrial clusters in a province approved by a competent authority; available land is suitable for the land use planning in a district;

b) An enterprise, cooperative or organization that has a legal status and capacity for investment in construction of technical infrastructure applies for approval as a technical infrastructure investor;

c) In the event industrial clusters have been established within a district, the average occupancy rate of those industrial clusters must exceed 50% or the clusters’ total area of industrial land yet to be leased out must not exceed 100 ha.

2. The following conditions must be met when expanding an industrial cluster:

a) Total area of the industrial cluster after expansion must not exceed 75 ha; available land is suitable for the land use planning in a district;

b) An enterprise, cooperative or organization that has a legal status and capacity for investment in construction of technical infrastructure applies for approval as a technical infrastructure investor;

c) The occupancy rate is at least 60% or the demand for leasing industrial land in the industrial cluster exceeds the area of current industrial land of the industrial cluster;

d) Essential shared technical infrastructural constructions have been completed and put into service (including internal roads, constructions for water supply and wastewater collection and treatment) in line with the approved detailed planning.

Thus, the following conditions must be met when establishing an industrial cluster in Vietnam:

- The industrial cluster is on the List of industrial clusters in a province approved by a competent authority; available land is suitable for the land use planning in a district;

- An enterprise, cooperative, or organization that has a legal status and capacity for investment in construction of technical infrastructure applies for approval as a technical infrastructure investor;

In the event industrial clusters have been established within a district, the average occupancy rate of those industrial clusters must exceed 50% or the clusters’ total area of industrial land yet to be leased out must not exceed 100 ha.

Besides, the conditions for expansion of industrial clusters in Vietnam are as follows:

- Total area of the industrial cluster after expansion must not exceed 75 ha; available land is suitable for the land use planning in a district;

- An enterprise, cooperative or organization that has a legal status and capacity for investment in construction of technical infrastructure applies for approval as a technical infrastructure investor;

- The occupancy rate is at least 60% or the demand for leasing industrial land in the industrial cluster exceeds the area of current industrial land of the industrial cluster;

- Essential shared technical infrastructural constructions have been completed and put into service (including internal roads, constructions for water supply and wastewater collection and treatment) in line with the approved detailed planning.

What does the application for establishment or expansion of an industrial cluster in Vietnam include?

Under Clause 1, Article 9 of Decree 32/2024/ND-CP, an application for establishment or expansion of an industrial cluster in Vietnam includes:

- An application form for establishment or expansion of industrial cluster, which is submitted by the district-level People’s Committee. If the industrial cluster is located in two district-level administrative divisions or more, the provincial People's Committee shall assign the People's Committee of one district to apply for establishment or expansion of the industrial cluster;

- The application form submitted by the enterprise, cooperative or organization for approval as technical infrastructure investor (including a commitment not to violate law and commitment to bear all costs and risks if not approved) enclosed with a report on investment in establishment or expansion of industrial cluster and a map determining the location and boundaries of the industrial cluster;

- A legitimate copy of the document proving legal status of the enterprise, cooperative or organization applying for approval as technical infrastructure investor;

- A legitimate copy of the documentation proving financial capacity of the enterprise, cooperative or organization applying for approval as the technical infrastructure investor, consisting one of the following documents: financial statement of the last 02 years; parent company's commitment to provide financial assistance; financial institution’s commitment to provide financial assistance; guarantee for investor’s financial capacity; other document proving financial capacity (if any);

- A legitimate copy of the document proving experience of the enterprise, cooperative or organization applying for approval as the technical infrastructure investor and other relevant document (if any).

What is the formulation of the Industrial cluster development plan in Vietnam about?

Under Article 4 of Decree 32/2024/ND-CP, an industrial cluster development plan is formulated as follows:

(1) An industrial cluster development plan is formulated on the following grounds:

- Vietnam's industrial development strategy, and provincial strategy for development of priority industries and sectors;

- Socio-economic development orientations, regional planning, and provincial technical and specialized planning;

- The demand for ground area, conditions concerning geography, traffic and human resources for attracting and relocating organizations and individuals to provincial industrial clusters for their investment in production and business;

- The ability to mobilize sources of investment capital from enterprises and the State, and other lawful capital sources to invest in construction of industrial cluster infrastructure of provincial industrial clusters;

- Requirements for environmental protection, economical and efficient use of land and other local human and natural resources.

(2) An industrial cluster development plan shall include, inter alia, the following contents:

- Legal grounds and necessity for formulation of an industrial cluster development plan;

- The assessment of the current status of investment in technical infrastructure; investment attraction, occupancy rate and production and business situations;

Fire prevention and fighting and prevention and rescue in industrial clusters; socio-economic efficiency of each planned industrial cluster;

Management of industrial clusters in the province; achievements, shortcomings and causes thereof;

- Forecasted factors that may impact the development of industrial clusters in each planning period; estimated demand for ground space of organizations and individuals making investment in industrial clusters, area of land available to develop industrial clusters in the district and province; estimated demand for labor in industrial clusters during the planning period;

- Viewpoints, objectives and orientations for development of industrial clusters in the province during the planning period;

- List of industrial clusters expected to be developed in the province during the planning period, including:

+ Names, locations (down to commune;

+ Maintaining an environmental safety distance from neighboring populated areas, national historical sites/monuments, rivers, lakes;

+ Only placing industrial clusters next to each other when there is a connection in terms of industries, environmental remediation, energy, etc. between industrial clusters), area, industries.

+ Detailed description of each industrial cluster, clearly stating:

++ land use status (on the principle that the use of land planned for rice cultivation and land in wildlife sanctuaries, historical - cultural sites/monuments, scenic landscape, etc. is restricted);

++ industries (with orientations towards industries that can be linked or of the same value chain of products and services given priority for production of the locality or its vicinity);

+ Explanation for grounds for removing and adding industrial clusters from/to the List of industrial clusters in the locality;

++ Estimated total investment for construction of industrial cluster infrastructure;

- Displaying status of and planning for industrial clusters expected to be developed on the provincial planning maps;

- Solutions for developing industrial clusters in the province during the planning period, including:

+ Mobilizing sources of capital for investment in infrastructure;

+ Mechanisms and policies to support the development of industrial clusters;

+ Environmental protection;

+ Management and implementation thereof).

(3) Funding and phasing of an industrial cluster development plan shall adhere to regulations on provincial planning.

Thus, the industrial cluster development plan must be formulated based on development strategies, socio-economic development orientations, regional and provincial plannings, conditions to attract and relocate organizations and individuals into investment and production, the ability to mobilize capital sources and ensure environmental protection, efficient use of land and resources and must have the above main contents.