What is industrial cluster? What conditions are required to establish an industrial cluster in Vietnam?

Regarding this matter, LawNet would like to answer as follows:

1. What is industrial cluster?

According to the provisions of Clause 1, Article 2 of Decree 32/2024/ND-CP (effective from May 1, 2024), industrial cluster means a place in which industrial production activities are carried out and services are provided for industrial and cottage-industrial production, with defined geographical boundaries and without any inhabitant living in the cluster, and which is constructed to attract and relocate small and medium-sized enterprises, cooperatives and cooperative associations to conduct production and business activities.

In addition, industrial cluster has an area exceeding 10 ha but not exceeding 75 ha. An industrial cluster in a mountainous district or a craft village industrial cluster has an area exceeding 05 ha but not exceeding 75 ha.

2. What are the conditions for establishment of an industrial cluster in Vietnam?

According to the provisions of Clause 1, Article 8 of Decree 32/2024/ND-CP, the following conditions must be met when establishing an industrial cluster:

- 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.

Thus, to establish an industrial cluster: the available land must be suitable for the land use planning; there are suitable investors; requirements regarding land in the local must be met.

3. What must be included in the application for establishment of an industrial cluster in Vietnam?

According to Article 9 of Decree 32/2024/ND-CP, an application for establishment or expansion of an industrial cluster 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).

At the same time, Main contents of the report on investment in establishment or expansion of the industrial cluster:

- Legal grounds, necessity and assessment of conformity with and satisfaction of the conditions for establishment or expansion of the industrial cluster; impacts of industrial parks and industrial cluster in the locality on the investment efficiency and occupancy rate of the industrial cluster;

- Current use of land, conditions for land expropriation, estimated demand for land, orientation for arranging industries that prove connective and supportive to production; land use structure and expected attraction of investment in the industrial cluster; assessment of ability to connect technical infrastructure inside and outside the industrial cluster;

- Determination of the objectives, area, location and scope of investment in technical infrastructure construction; analysis and selection of an alternative on investment in construction of system of technical infrastructural constructions; plan on land clearance and relocation assistance (if any); deadline and schedule for project execution in conformity with reality and ability to mobilize resources; plan and schedule for attracting investment in and relocation to the industrial cluster, and its occupancy rate; plan for water source pollution, deterioration and depletion prevention and control; plan for fire prevention and fighting prevention and rescue in the industrial cluster; housing plan for workers in the industrial cluster;

- Determination of legal status, capacity and experience of the enterprise, cooperative or organization applying for approval as technical infrastructure investor; expected total investment, structure and ability to balance and mobilize sources of investment capital for project execution;

- Costs of servicing, maintenance and operation of the system of technical infrastructural constructions, other relevant costs; methods of managing and operating such system after being put into operation;

- Preliminary assessment of environmental impacts in accordance with regulations of law on environmental protection; estimated capacity for receiving and treating waste around the area where the industrial cluster is expected to be established or expanded; forecasted sources of waste and environmental impacts of industries in which investment is expected to made in the industrial cluster and environmental management plan; assessment of the suitability for the water source functions;

- Proposed investment incentives, special mechanisms and policies (if any); analysis and assessment of socio-economic impacts and efficiency of the industrial cluster; solutions for implementation thereof.

So, the application for establishment or expansion of an industrial cluster includes an application form for establishment or expansion of an industrial cluster, which is submitted by the district-level People’s Committee; an application form for approval as a technical infrastructure investor, enclosed with a report on investment in the establishment or expansion of an industrial cluster and a map determining the location and boundaries of the industrial cluster; and documents verifying the legal status, financial capacity, and experience of the investor.

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