The legal regulations related to the development of industrial zones and economic zones in Vietnam
Laws and regulations related to the development of industrial parks and economic zones in Vietnam have been in place for over 32 years. Although these regulations are currently limited to government decrees, the contents regarding the construction direction, development plans for industrial park systems, management of infrastructure investment, establishment, operation, development policies, and state management of industrial parks and economic zones are becoming increasingly refined, clear, and transparent for business investment activities within industrial parks.
The construction direction for industrial parks and economic zones is one of the contents of regional planning as stipulated in Article 26, Clause 2 of the Planning Law. This content determines the expected total area, types of industrial parks, and economic zones of each province, centrally-run city belonging to the region, identifying economically significant zones that play a driving role in the socio-economic development of the region.
The development plan for the industrial park system is a content of provincial planning as stipulated in Article 27, Clause 2 of the Planning Law, which must establish a list of industrial parks within the province's jurisdiction.
To date, Vietnam has established 407 industrial parks in 61 out of 63 provinces and centrally-run cities, with a total area of nearly 125,000 hectares. Foreign investment in industrial parks includes over 11,000 foreign-invested projects with a total registered capital of over USD 230 billion, and 10,200 domestic investment projects with a total registered capital of VND 2.54 trillion.
Businesses within industrial parks contribute approximately 50% of the country's total export turnover, contributing to Vietnam's transition from a trade deficit to a trade surplus, significantly contributing to state budget revenue. The industrial park and economic zone system have played an important role in business development, restructuring the industrial production development, participating in global production and supply chains.
In addition to the positive aspects, some regulations are currently "hindering" the construction and development of industrial zones and economic zones
There have been many cases showing that the construction and development of industrial zones have encountered numerous obstacles related to regulations. For example, to comply with the legal requirements for export enterprises, they must meet certain customs inspection and supervision conditions, such as:
(1) Having a solid fence separating the area from the outside; having gates, entrances, and exits ensuring that goods are only transported into and out of the export enterprise through designated gates and doors.
(2) Having a surveillance camera system covering all positions at the gates, entrances, exits, and storage locations for goods at all times during the day (24/7, including holidays); the camera image data must be connected online to the enterprise management agency and stored at the export enterprise for a minimum of 12 months.
(3) Having import management software for goods that are tax-exempt for export enterprises to report on import-export-inventory settlement according to customs regulations.
The trouble arises from Article 30, Clause 1 of Decree 82/2018/ND-CP regulating the management of industrial zones and economic zones. According to this clause, export enterprises are required to meet certain customs inspection and supervision conditions as specified in the Investment Registration Certificate. The investment registration authority is responsible for obtaining the opinion of the customs authority on the capability to meet customs inspection and supervision conditions before issuing the Investment Registration Certificate. In practice, no foreign investment project registering anew can meet the customs inspection and supervision conditions mentioned above.
Decree 82/2018/ND-CP expired on July 15, 2022, and was replaced by Decree 35/2022/ND-CP dated May 28, 2022, by the Government, which regulates the management of industrial zones and economic zones, effective from July 15, 2022. Article 26 of Decree 35/2022/ND-CP specifically applies to export processing zones and export enterprises. Accordingly, in the case of establishing an export enterprise simultaneously with the investment registration procedures, the investor shall submit a commitment on the ability to meet customs inspection and supervision conditions as prescribed by the laws on export and import taxes, along with the application dossier for the Investment Registration Certificate as prescribed by the investment laws. The investment registration authority shall record the objective of establishing the export enterprise in the Investment Registration Certificate when issuing it.
Therefore, the process of registering the establishment of export enterprises is much more convenient and transparent than the provisions in Decree 82, but it takes more than 4 years, with obstacles related to documentation, procedures, and sequences for establishing new export enterprises being resolved.
Under Decree 35/2022/ND-CP, industrial zones include: industrial zones; export processing zones; supporting industrial zones; specialized industrial zones; eco-industrial zones; high-tech industrial zones; and industrial sub-zones. Among these, eco-industrial zones are a type of industrial zone in which enterprises engage in cleaner production activities and efficient resource utilization. They involve collaboration and cooperation among enterprises to implement industrial symbiosis activities aimed at enhancing the economic, environmental, and social efficiency of businesses. Industrial symbiosis refers to cooperation among enterprises within an industrial zone or across different industrial zones to optimize the use or reuse of input and output factors such as raw materials, materials, water, energy, waste, scrap, and other factors in the production and business process.
In the report summarizing 30 years of industrial zone and economic zone development by the Ministry of Planning and Investment, which has been approved by the Government, it is projected that by 2030, 40-50% of localities will have plans to convert existing industrial zones into eco-industrial zones, and 8-10% of localities will have plans to build new eco-industrial zones.
However, many legal issues regarding the formation and development of eco-industrial zones, as well as the conversion of existing industrial zones into eco-industrial zones, have not been codified or specifically guided. For example, concerning cleaner factors, there will be higher environmental standards than the current ones in effect. What administrative sanctions will be imposed in the environmental sector specifically for enterprises within eco-industrial zones? Will enterprises investing, producing, and trading within eco-industrial zones be required to collaborate and cooperate to implement industrial symbiosis activities, thereby eliminating competitiveness? Will the Vietnamese government offer more incentives to attract enterprises to invest in eco-industrial zones when cleaner factors need to be applied? These are some of the questions that need clarification and legal guidance.
Which policy bottlenecks will be removed to promote the development of industrial zones after the National Assembly has passed the amended Land Law?
In Decree 35/2022/ND-CP, investment projects for the construction and operation of infrastructure in industrial zones are considered projects that utilize land. The industrial land area refers to the portion of land within the industrial zone allocated for investors to lease for building factories, offices, warehouses, and for carrying out investment projects, production, and business activities. This area is determined in the industrial zone construction plan approved by the competent state authority.
Under Article 79 of the amended Land Law recently passed by the National Assembly on January 18, 2024, there are 32 cases in which the State reclaims land to implement socio-economic development projects for national and public interests, aiming to maximize land resources utilization, enhance land use efficiency, develop modern economic and social infrastructure, implement social welfare policies, protect the environment, and preserve cultural heritage.
Specifically, under Clause 22 of Article 79, the State reclaims land for the following purposes: Implementing industrial park projects, industrial clusters; high-tech industrial zones; agriculture areas applying high technology; centralized information technology zones; forestry areas applying high technology; and non-customs areas within economic zones. This provision is clearer and more specific compared to Article 62 of the 2013 Land Law. The state has a legal basis to reclaim land for investors leasing land to implement industrial zone projects.
What tasks need to be carried out immediately, especially regarding resolving land-related disputes?
The amended Land Law takes effect from January 1, 2025. Regarding the resolution of disputes related to land, Article 236 of the amended Land Law, Clause 5 stipulates: Jurisdiction to resolve land disputes: Disputes between parties arising from commercial activities related to land shall be resolved by the People's Court in accordance with the law on civil procedure or by the Vietnam Commercial Arbitration Center in accordance with the law on commercial arbitration. Clause 6 stipulates: People's Committees at all levels are responsible for providing relevant documents and records regarding land management and use when requested by the People's Court or the Vietnam Commercial Arbitration Center as a basis for resolving disputes.
Therefore, it is necessary to promptly amend the relevant provisions in the Civil Procedure Code 2015, Article 470 on the Separate Jurisdiction of Vietnamese Courts; amend and supplement relevant provisions in the Commercial Arbitration Law 2010, so that the method of resolving disputes through commercial arbitration between parties arising from commercial activities related to land can be implemented early in practice.
Duy Nguyen, compiled from VnEconomy