Setting up a Manufacturing Plant in Vietnam's Industrial Parks - An Essential Guide for Investors

The Ho Chi Minh City Export Processing and Industrial Zones Authority (HEPZA) has proposed developing 10 more industrial parks covering a total area of over 2,465 ha in the 2021-2030 period. It also proposed to develop an additional 800 ha of industrial land to attract investment in specialized and hi-tech industrial parks.

According to the report from HEPZA, as of December 2024, the total investment capital, including new grants and adjustments, reached USD 491.7 million, achieving 89.4% of the annual plan (USD 550 million), a decrease of 51.4% compared to the same period last year (over USD 1.01 billion). The leased land area reached 25.35 hectares, while the leased factory area totaled 80,261 square meters. The average investment per hectare was USD 8.5 million. In 2025, the total expected investment capital is projected to be USD 550 million. Several large-scale investment projects in export processing zones and industrial parks are currently underway. Once operational, these projects are expected to utilize an investment capital of approximately VND 23,700 billion.

In fact, implementing projects in industrial parks has been a wise investment for most investors, especially those in the manufacturing sector. This article will explore a deep dive into the pros and cons of investing in industrial parks and provide an ultimate guide to relevant Vietnamese regulations. 

Evaluating the benefits and drawbacks of investing in industrial parks

1. Benefits 

a. Economic Incentives: Industrial parks in Vietnam often come with attractive incentives such as tax breaks, import duty exemptions, and favorable land lease terms to attract both local and foreign investors. Here are some detailed examples:

Corporate Income Tax (CIT) Incentives:

• Preferential Tax Rates: Investors can benefit from reduced CIT rates, such as 10% for the lifetime of the project, 15% for the lifetime of the project, or 17% for 10 years from the first year of income generation.

• Tax Holidays: Tax exemptions for a certain period, followed by a reduction in payable tax amounts. For example, a 4-year tax exemption followed by a 50% reduction for 9 subsequent years.

Import Duty Exemptions: Import duties on goods imported to form fixed assets, raw materials, supplies, and components for manufacturing purposes are exempted or reduced.

Special Incentives for Large-Scale Projects: Projects with significant capital investment and employment generation may qualify for extended tax rates, tax holidays, and land and water rent exemptions.

b. Strategic Location: Many industrial parks are strategically located near major transportation hubs, ports, and urban centers, facilitating logistics and distribution. For example: 

• Gilimex Industrial Park:

  • Situated in the heart of Central Vietnam, this industrial park offers exceptional strategic positioning with remarkable connectivity of geographical positioning:

    • Proximity to critical transportation hubs:

* Phu Bai International Airport: 2 km

* Chan May Port: 50 km

* Da Nang City: 80 km

• Direct National Highway 1A access

• Integrated with Cam Lo – La Son – Tuy Loan Expressway network

• Core5 Industrial Park:

  • Current Project Portfolio: 8 total projects

    • 7 projects in North Vietnam

    • 1 project in South Vietnam

• Hoa Binh Industrial Park: Strategically situated in Long An Province, the industrial park offers exceptional accessibility and proximity to key economic zones:

  • Located just 500 meters from National Highway 1A

  • Conveniently positioned 15 kilometers from Binh Chanh, Ho Chi Minh City

• Deep C Industrial Park (Hai Phong and Bac Ninh): This is the largest industrial park in Vietnam, covering 3,400 hectares. Its location near Hai Phong port and major highways makes it an ideal hub for logistics and distribution.

c. Skilled workforce: Vietnam's young and dynamic workforce is well-suited for industrial and manufacturing jobs, providing a steady supply of labor.

d. Infrastructure: Industrial parks are typically equipped with essential infrastructure like roads, electricity, water supply, and communication networks, reducing initial setup costs.

e. Government support: The Vietnamese government actively supports foreign investment in industrial parks, offering streamlined regulatory processes and assistance with business setup.

f. Economic growth: Investing in industrial parks contributes to Vietnam's rapid economic growth, providing opportunities for businesses to tap into a growing market.

2. Consideration or Drawbacks 

   1. Environmental concerns: Industrial and manufacturing activities can lead to environmental pollution, including air and water pollution, which requires compliance with stringent environmental regulations.

   2. High initial investment: Developing or acquiring space in an industrial park can require significant upfront capital, which might be a barrier for smaller businesses.

   3. Market risks: Economic downturns or shifts in industry trends can impact the profitability of investments in industrial parks.

   4. Competition: Industrial parks may attract multiple businesses, leading to competition for resources, labor, and market share.

   5. Regulatory compliance: Businesses must navigate complex local regulations and standards, which can be time-consuming and costly.

Setting up a Manufacturing Plant in Vietnam's Industrial Parks

Setting up a Manufacturing Company in Industrial Parks

1. Selecting the right industrial park

Choosing the right location is pivotal to the success of your manufacturing operations. Factors to consider include:

• Geographical advantages: Industrial parks in the southern region, such as Binh Duong and Dong Nai, provide proximity to major ports and a well-developed logistics network. In the north, areas like Hai Phong and Bac Ninh offer access to China and Northeast Asia.

• Industry-specific offerings: Some parks specialize in sectors like electronics, agro-processing, or textiles, offering tailored facilities and expertise.

• Incentives and support services: Many parks offer tax incentives, streamlined administrative support, and ready-built factories, reducing setup time.

Investors should engage with industrial park developers early to understand available facilities, costs, and terms for land or factory leases.

2. Navigating licensing requirements

The establishment of a manufacturing company in an industrial park involves multiple licensing steps:

• Investment Registration Certificate (IRC): required for foreign investors, the IRC outlines the project’s scope, capital requirements, and operational timelines. The process includes submitting a detailed feasibility study to the Department of Planning and Investment (DPI).

• Enterprise Registration Certificate (ERC): this business license formally registers the entity and allows it to conduct operations in Vietnam.

• Environmental Impact Assessment (EIA): manufacturing projects must assess and mitigate environmental risks, with approvals obtained from the Ministry of Natural Resources and Environment (MONRE).

• Fire protection and safety assessment: this is necessary not for only compliance but above all, to protect company’s personnel and company’s assets during the manafacturing process. 

• Other business licenses as per the specific sector of the company: each business field will require different business licenses to be obtained from different competent authorities. It is highly recommend to consult your trust advisor for the details and procedure getting approval before operating the manaufacturing plant. 

3. Registration of the manufacturing company with competent authorities

The process of registering a manufacturing company in Vietnam involves coordination with various government authorities. Key steps include:

• Preparation of Documents: Investors must prepare essential documents, including the company’s charter, list of shareholders or members, and identification documents of representatives. For foreign investors, additional documents such as audited financial statements or bank statements may be required.

• Lodgement: 

  • Register for investment project to the Management Board of the Industrial Park: this procedure to obtain the Investment Registration Certificate (IRC) for the manufacturing project implemented in the chosen industrial park. It usually takes 1 to 3 months to complete this step, depending on the project and the responsiveness of the Management Board. Besides, the approval of the Management Board mostly depends on the commitment and explanation from investors regarding the potentiality and development of the project. 

  • Register for the company in Vietnam to implement the manufacturing project: the application of this step is submitted to the Department of Planning and Investment (DPI) in the province where the industrial park is located. The result to be obtained is the Enterprise Registration Certificate (ERC) and usually takes 7-10 days to complete. 

• Post-establishment procedure: this step includes several administrative tasks for the smooth operation of the company and manufacturing plant, such as:

  • Engrave the company stamp and director stamp

  • Locate the signboard of the company and/or the manufacturing plant 

  • Initial tax registration and accounting system to tax department 

  • Declare and pay license tax

  • Bank account set up and capital contribution 

  • Set up invoicing system and register token/e-signature 

4. Land Lease and Factory Construction

Industrial parks typically offer two main options for setting up manufacturing facilities:

• Leasing ready-built factories: Ideal for small to medium-sized enterprises looking for quick operational readiness.

• Long-term land lease: suitable for larger projects requiring custom-built facilities. Investors must sign a lease agreement with the park developer and obtain a Land Use Rights Certificate (LURC).

• Construction permits: For custom-built factories, investors must secure construction permits, ensuring compliance with design, safety, and environmental regulations. Coordination with local authorities and industrial park management is essential to streamline this process.

Establishing a manufacturing company in Vietnam’s industrial parks offers tremendous opportunities but requires thorough preparation and legal expertise. By understanding the regulatory landscape, leveraging local incentives, and engaging experienced legal professionals, investors can navigate the complexities and build a strong foundation for long-term success. Vietnam’s industrial parks are not just places for production but gateways to dynamic growth in the global manufacturing landscape.

What we can do?

At Van Pham LLC, we leverage our extensive experience in supporting hundreds of investors in their Vietnam expansion ventures across various industries. Our comprehensive services ensure that you receive the ultimate support throughout your journey in Vietnam. 

Here’s what we offer:

• Market Research:

We identify and assess vendors in industrial parks, delivering qualified suppliers based on your specifications. Our service includes a logistics analysis report to recommend optimal locations.

• Deal Advisory:

We source and facilitate M&A opportunities aligned with your goals, ensuring clear communication and smooth negotiations. Post-deal services like due diligence and licensing are available as needed.

• Land Due Diligence:

Our team reviews leasing plant legal documents and provides detailed due diligence reports, ensuring compliance and clarity.

• MOU/Lease Contract Review:

We review lease contracts or MOUs to ensure clear, compliant terms and support you through the signing process.

• Comprehensive Market Entry Advice:

We provide strategic advice on market entry in Vietnam, including setting up affiliates, managing cash flow, utilizing funding efficiently, and structuring operations and organizations to align with your business goals.

• Bank Account and Transaction Management:

We assist in opening and managing local bank accounts, ensuring smooth and compliant financial transactions to support your RO's operations.

• Licensing and Business Record Management:

Our team handles the entire licensing process, from application to approval, and maintains accurate business records to ensure compliance with local regulations.

• Human Resource Management:

We offer advice and service regarding work permits and labor compliance, ensuring your team operates effectively and legally in Vietnam.

• Secretary Services:

Our secretary services cover administrative tasks, document management, and communication facilitation, allowing you to focus on core business activities.

Additional Services to Enhance Your Business Success:

• Legal Compliance and Risk Management:

We provide legal compliance services to navigate the complex regulatory environment in Vietnam and implement risk management strategies to safeguard your business.

• Tax Advisory and Planning:

Our experts offer tax advisory services, helping you plan and manage your tax obligations efficiently, including VAT, PIT, and other relevant taxes.

• Localization and Cultural Integration:

We support your business in understanding and integrating into the local culture, which is crucial for successful market entry and long-term operations.

• Business Expansion Support:

As your business grows, we provide ongoing support for scaling operations, entering new markets within Vietnam, and diversifying your business activities, including the RO conversion to company or separate company establishment. 

By partnering with Van Pham LLC, you gain a dedicated team committed to your success in Vietnam. Our holistic approach and deep understanding of the local market ensure that your investment is optimized, compliant, and positioned for long-term growth. Please do not hesitate to direct us via email: info@vanphamllc.com for a 45-minute free consultation.