New Investment Opportunities in South Vietnam: An Interview with Long Hau Industrial Park
Vietnam Briefing’s Senior Editor, Edward Barbour-Lacey, recently had the opportunity to interview Mr. Sy Tran – Director of the Sales and Marketing Department at the Long Hau Corporation (LHC). Mr. Sy has many years of experience working with well-known multinational corporations and leading Vietnamese companies in the FMCG and B2B industries. These companies include: Coca Cola, New Zealand milk, Foster Vietnam, and Vinamilk.
LHC is an industrial park (IP) developer located in southern Vietnam. LHC is operated under the cooperation of IPC (Tan Thuan Industrial Promotion Company – the investor of Tan Thuan EPZ, Phu My Hung New City, and SPCT sea port) and Jaccar Holdings (a French capital firm). It was established in 2007 and listed in Ho Chi Minh City (HCMC) in 2010.
Currently, LHC is managing the Long Hau IP, a well-organized 288 hectare industrial zone located near HCMC and a deep-water seaport system. Long Hau IP is a top ranked industrial park in Vietnam due to its ability to save its clients time and money as well as helping them achieve sustainable development. LHC is a realizable destination for foreign investors to grow their businesses.
Vietnam Briefing (VB):
Long Hau IP is located within Long An province, could you give us a brief overview of what makes this region a good investment destination for foreign investors?
Long Hau Corporation (LHC):
Long An is situated in an advantageous position in the Southern Key Economic Region of Vietnam. It serves as a bridge between Ho Chi Minh City in the north and 12 provinces in the Mekong Delta in the south. The province also has Cambodia to its west and the East Sea (South China Sea) to its east. The province’s proximity to a new deep water seaport system also makes Long An stand out in the region and play an important role in the economic development of southern Vietnam.
While Long An is still mainly agricultural, it is steadily investing more money into building up various industries (plastics, textile, machinery). It is also investing heavily in infrastructure development and streamlining its legal system in order to attract more FDI into the region.
In recent years, Long An has emerged as a key province for the attraction of investment and the development of industrial parks (IP) – it currently has more than 28 IPs. Among these IPs, Long Hau IP has been one of the most successful zones due to its strategic location, good infrastructure system, and full array of supporting services.
In 2013, Long An had a total of 37 licensed FDI projects, with US$160.3 million in registered capital and Long Hau IP was the most attractive IP in the region.
That is very interesting. Why do you think now is a good time to move to the country?
Looking around the world, Vietnam is currently one of the most outstanding destinations for foreign investment. This is due to both internal and external factors.
Looking internally, there are a number of factors which make Vietnam a very attractive investment destination, these include:
- A market of 90 million people – the country is experiencing a demographic dividend wherein it is seeing an explosion in its youth population. These youth are increasingly highly skilled and well educated;
- Robust economic development, despite global downturns, with an average growth rate of 7.01 percent (2006- 2010) and an expected growth rate between 2011-2015 of 7.10 percent (according to the OECD);
- Cheap labor costs – in many cases the costs are 50 percent that of China;
- An industrialized economy with attractive incentives for foreign investors;
- A key strategic location in the Southeast Asian region, close to important shipping lines and key countries like China and Singapore.
Looking globally, foreign investors are watching the remarkable rise in production costs occurring around the world in places like China, the Philippines, and Thailand. In addition, investors have had cause for concern about the stability of the business situation in many of those countries. These factors are forcing foreign investors to look for a destination where they feel safe and achieve a healthy return on their investment. It seems clear to me that Vietnam is just such a destination.
What type of businesses do you think can be most successful at the Long Hau Industrial Park?
While many types of businesses can be successful at our IP, there are certain types of “encouraged” business types that will find Long Hau a very good location to set up their operations. These include firms which are engaged in: food processing, FMCG, logistics, precision engineering, electronics, pharmaceuticals, apparel, and other eco-friendly industries and general supporting industries.
There are a number of reasons why these types of industries would benefit from locating in our IP, and these include the fact that we are a prime location for import/ export activities and it is very easy to recruit manpower (both high level and ordinary people) because the IP is located just 19 km from the center of HCMC. It is also easy to access and find local suppliers. We are environmentally conscious and have a green designed zone, and we provide a high level of support to investors. We even have an area designed specifically for food processing enterprises in our zone.
Currently, we have 123 investors in our IP, 57 of them come from foreign countries such as Japan, Korea, Germany, U.S., Australia, Belgium, France, etc. Out of the 288 hectares that are currently available, our occupancy rate is 70 percent. However, we are also developing one more phase of 141 hectares in order to meet the demand of future inflows of capital. As a seven year old industrial zone, this is an undeniable success for Long Hau IP.
Are there any incentives offered by the government or LHC for foreign investors coming to Long Hau Industrial Park?
Yes, for those who choose to locate in Long An province, new investment projects will receive a Corporate Income Tax incentive. The government offers a two year exemption on Corporate Income Tax (CIT), followed by a four-year 50 percent reduction.
This type of incentive definitely helps to support investors in our zone and helps to make us more attractive than other IPs in HCMC.
Does LHC help foreign investors hire employees?
Yes, in fact we offer new clients one year of ordinary worker recruitment for free.
Our Human Resource Center receives orders from investors, looks for the right candidates in our current pool, or (if needed) use our recruiting channels. All applicants are then interviewed by the investor. We do not charge for any candidates that the investor chooses to hire.
We also offer a supply of temporary workers and have a number of training centers (language and computer classes) available so that employees can continue boosting their skills.
What sort of amenities does your IP have?
We have many amenities that are keys to making a business successful and to making its employees feel at home. These include:
- Customs office onsite;
- Police station onsite
- Living quarters;
- Post office/customs office/banks;
- Football stadium/Gym/Karaoke;
- 24 hours security guards;
- Fire protection station;
- Clinical services are on duty 24/7; and
- Dormitory area with a 700 room capacity and able to house 7,000 workers at a price of approximately US$15/ month.
Could you tell us more about your ALOHA center?
Yes, this is a very valuable resource for our clients. The center helps them to get in contact with firms like Dezan Shira who are able to help them with their business activities and answer any questions they might have about doing business in Vietnam. The ALOHA center also hosts a number of events at which important information about Vietnam is imparted to our clients. In fact, we are hoping that Dezan Shira will be able to lead some of our events on moving your business to Vietnam, and on important tax and regulatory information.
What sort of options for land leasing do you offer?
We offer a number of options for land leasing. In general, our price per square meter starts from US$85, depending on the location. The leasing term is from 43 to 45 years – this is much longer than other IPs in Vietnam
Furthermore, we also have ready-built factory leasing; these start from the size of 1,000 sqm.
Another option offered is that of custom built factories.
What is the process that a company must go through in order to start operations in your IP?
We welcome all investors to visit Long Hau industrial park and learn about how suitable it is for their business to set up operations here.
After that, using our one-stop service, the business applies for an Investment Certificate – this process usually takes less than 15 days. Once this is accomplished, the company is a legal entity with a unique tax code and seal, and it can operate normally in Vietnam.
Could you tell us about some of the successful partnerships that you have developed at the Long Hau IP?
For us at the Long Hau IP, our most valuable success comes from the satisfactory and thriving businesses of our current tenants.
In particular, we have become a popular destination for Japanese investors – with 40 Japanese tenants from the precision machinery and electronics industries. The engagement with Long Hau IP of more than 10 companies from Korea, the United States and Australia is also a big motivation for us to keep moving on. Puma, Lotte, Magic TechWin, Lock & Lock, Wahl Clipper, Swire Cold Storage, Konoike are some of the big brand names in our zone.
Thank you Mr. Sy for your time and the information that you have provided here today on Long An province and the Long Hau Industrial Park. I am sure that everyone found it very helpful.
Thank you Edward for giving me the chance to discuss our industrial park with Dezan Shira & Associates, I hope that we will have many opportunities in the future to help both of our clients succeed in the their business activities in Vietnam.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email email@example.com or visit www.dezshira.com.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
Developing Your Sourcing Strategy for Vietnam
In this issue of Vietnam Briefing Magazine, we outline the various sourcing models available for foreign investors – representative offices, service companies and trading companies – and discuss how to decide which structure best suits the sourcing needs of your business.