Bigger incentives proposed to spur supporting industries

Southern province Ba Ria-Vung Tau is sourcing a variety of incentives to attract investors to its efforts to develop supporting industries.

Provincial authorities recently finalised and submitted to relevant government agencies a project on setting up a specialised mechanical engineering industrial park (IP) to be positioned in provincial Chau Duc district.

Provincial authorities recently finalised and submitted to relevant government agencies a project on setting up a specialised mechanical engineering industrial park (IP) to be positioned in provincial Chau Duc district.

The provincial management is calling for their new IP to be given similar incentives to those of another specialised IP which was reported to be positioned in the Dinh Vu-Cat Hai Economic Zone in northern Haiphong port city.

This means provincial projects involving in supporting industry development would benefit from equal incentives as applied to areas facing hardships for socioeconomic development or special investment encouragement fields.

The southern province also sources similar incentives for businesses venturing on industrial park infrastructure development to attract supporting industries.

Incentive recipients under the proposal are projects covering aforesaid fields irrespective of the fact the projects are new or expanded.

Besides, the province also proposes not forming a specific council to appraise incentives for supporting industry items as regulated in prime ministerial Decision 12/2011/QD-TTg presenting policies for development of several supporting industries.

Provincial People’s Committee Deputy Chairman Ho Van Nien articulated the need to simplify recognition of supporting industry businesses qualified for the incentives.

Accordingly, the provincial People’s Committee and IP Authority shall be given the right to recognise supporting industry businesses when granting investment certificates for businesses producing items listed in prime ministerial Decision 1483/QD-TTg enacted in August 2011.

For products outside the list, the Ministry of Industry and Trade shall present specific criteria and decentralise IP Authority to consider recognising supporting industry businesses when granting investment certificates.

The province also recommends not appraising environmental impact assessment reports of supporting industry projects presented by small and medium size enterprises (except areas likely to cause environmental contamination like painting, welding or plating) because these specialised IPs feature ready-built standard waste-water treatment facilities.

Earlier, Haiphong and Ba Ria-Vung Tau were assigned by the government to work on building specialised IPs earmarked for mechanical manufacturing and electronic development to attract foreign investors, particularly those coming from Japan.

In early July 2013, prime minister approved ‘Industrialisation strategy within Vietnam-Japan cooperative framework to 2020 with vision towards 2030′.

The strategy focuses on improving the production capacity of six key industries including electronics, agricultural machinery, agro and seafood processing, shipbuilding, environment, energy efficient, and automobile and part production.

It aims to promote technology upgrades, raise labour expertise, and hone Vietnam’s industrial competitiveness on the world markets.

Experts assumed that these key industries, albeit hosting vast numbers of businesses and making significant contributions to the economy, have reported modest profitability and businesses in these sectors are mainly busy with processing or making raw products with low value addition.

Underdeveloped supporting industries are cited as the largest challenge to Japanese investors doing business in Vietnam. Vietnam is strong in export but the profit rate remains modest not commensurate with the country’s actual potential due to low-paced supporting industries, according to Kyoshiro Ichikawa, a Vietnam-Japan Joint Initiative Working Team leader.

By Hoang Nam

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