Incentives for and policies to provide assistance in development of industrial clusters in Vietnam as of May 1, 2024

Incentives for and policies to provide assistance in development of industrial clusters in Vietnam as of May 1, 2024 (Internet image) 

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

Incentives for and policies to provide assistance in development of industrial clusters in Vietnam as of May 1, 2024

(1) Investment incentives for industrial cluster infrastructure construction projects and production and business investment projects in industrial clusters in Vietnam

- An industrial cluster which is a disadvantaged area; investment in construction of industrial cluster infrastructure is a business line eligible for special investment incentives.

- The application of incentives to industrial cluster infrastructure construction projects and production and business investment projects in an industrial cluster shall comply with regulations of law on land, law on taxation, law on credit and other relevant regulations of law. In case the law stipulates different incentives, the incentive that is most beneficial shall apply.

(2) Assistance in investment in construction of industrial cluster infrastructure in Vietnam

- The local government budget (including extra funding from the central government) shall provide financial assistance in investment and development of technical infrastructure systems inside and outside industrial clusters in the locality (prioritize the provision of assistance in investment in technical infrastructural constructions serving environmental protection of industrial clusters that have been put into operation; assistance in investment in essential shared technical infrastructural constructions of industrial clusters in disadvantaged and extremely disadvantaged areas, industrial clusters developing in the direction of linking industries, specialization, assistance, ecology, preservation of traditional craft) according to the provisions of the Law on Public Investment 2019 and the Law on State Budget 2015.

The financial assistance provided by the State does not exceed 30% of the total investment capital of the industrial cluster infrastructure construction project. The financial assistance shall be excluded from the total investment of the project to determine the rents for subleased land and infrastructure regarding investment projects in the industrial cluster. The technical infrastructure investor shall manage, repair and regularly operate technical infrastructural constructions provided with financial assistance to serve common activities of the industrial cluster.

- The provincial People’s Committee shall decide under its authority and regulations of law or request the provincial People’s Council to decide the provision of assistance in investment in construction of technical infrastructure in industrial clusters within its province.

(3) Assistance in development of industrial clusters in Vietnam

- The central government budget shall cover funding for development of industrial clusters by the Ministry of Industry and Trade, including:

+ Investigation, establishment and operation of industrial cluster database; organization of conferences and seminars and cooperation in investment promotion; communications, printing and publishing documents, provision of professional training in laws and policies on industrial clusters;

+ Review, assessment and formulation of management policies and models, and experience in development of industrial clusters in the country and foreign countries; formulation and dissemination of policies and laws on management and development of industrial clusters;

+ Studying and establishing criteria for determining effective industrial cluster development models which protect the environment (such as specialized industrial clusters, supporting industrial clusters, ecological industrial clusters, etc.); provision of guidance on and recognition of industrial cluster development models; provision of rewards, conduct of final review, and preparation of reports on industrial cluster development orientations.

- The local government budget shall cover funding for development of industrial clusters by local governments, including:

+ The activities prescribed in points a and b clause 1 of Article 27 of Decree 32/2024/ND-CP;

+ Investment promotion activities; investigation and survey into organizations and individuals wishing to relocate to and invest in industrial clusters; preparation and appraisal of applications for establishment or expansion of industrial clusters; formulation of detailed planning for industrial cluster construction; assistance in completion of administrative procedures related to industrial clusters;

+ Provision of financial assistance in setting up investment projects, transport and installation of machinery and equipment for enterprises, cooperatives, cooperative associations and households in craft villages or populated areas so as for them to relocate to an industrial cluster or craft village industrial cluster. Specific financial assistance shall be decided by the provincial People’s Committee.

- Funding for development of industrial clusters is the public service budget; is managed and used in accordance with the Law on State Budget and its guiding documents.

(Chapter V of Decree 32/2024/ND-CP)

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

Ho Quoc Tuan

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