Conditions for establishment or expansion of an industrial cluster in Vietnam as of May 1, 2024

Conditions for establishment or expansion of an industrial cluster in Vietnam as of May 1, 2024 (Internet image)

On March 15, 2024, the Government issued Decree 32/2024/ND-CP on management and development of industrial clusters in Vietnam.

Conditions for establishment or expansion of an industrial cluster in Vietnam as of May 1, 2024

(1) 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.

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

- 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.

(Article 8 of Decree 32/2024/ND-CP)

Application for establishment or expansion of an industrial cluster in Vietnam as of May 1, 2024

(1) 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).

(2) 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.

(Article 9 of Decree 32/2024/ND-CP)

More details can be found in Decree 32/2024/ND-CP taking effect on May 1, 2024 and replacing Decree 68/2017/ND-CP, Decree 66/2020/ND-CP.

Ho Quoc Tuan

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