VietNamNet Bridge – A lot of foreign invested enterprises (FIEs) in HCM City now seek to rent ready made production workshops built up by the industrial zone development companies instead of setting up production workshops themselves on the leased land.

Analysts have noted that foreign invested enterprises tend to lease ready production workshops in order to be able to quickly start their production. This allows them to shorten the investment process and quickly churn out products.

The report of Hepza, the HCM City Management Board of Industrial Zones and Export Processing Zones has confirmed that while less enterprises leased land plots to build production workshops themselves; the ready-made workshops leased in the first six months of 2013 was on the rise.

The report showed that 3.9 hectares of land in industrial zones and export processing zones were leased to FIEs in the first half of the year, a decrease of 55 percent in comparison with the same period of the last year. Meanwhile, the area of leased ready made workshops increased by 18,200 square meters, up by 161 percent during the same time.

The FIEs that leased ready made workshops were mostly the small and medium scale enterprises, operating in the supporting industries.

An official of the Hepza’s Investment Division has noted that the small FIEs have just arrived in Vietnam and made investment there in a plan to explore the market. Therefore, they want to lease ready made workshops for two or three years during which they would make products on a trial basis.

If the business goes smoothly, the investors would think more about what they would do in the future. If not, they may quit the Vietnamese market. This explains why the most of the projects have low investment capital.

Most of the small investors are from Japan, South Korea and Taiwan. However, Hepza has noted that the European investors from Germany, Sweden and the Netherlands have come recently, running the projects on precise mechanical engineering.

Analysts have noted that the new small investors not only lease the ready made workshops in industrial zones, but they also seek to rent the workshops which have been left idle because domestic enterprises have to scale down the production in the economic recession.

Having realized the growing tendency, Hepza said it plans to work out with the infrastructure development companies on a plan to develop standard workshops to attract small and medium investors into supporting industries.

The watchdog agency has also said that it would join forces with Japanese infrastructure developers to speed up the plan on building up standard workshops for Japanese manufacturers in the supporting industries, to be located in the Hiep Phuoc Industrial Zone.

While the land area leased by FIEs is on the decrease, the land area leased by domestic enterprises is on the rise. In the first half of the year, domestic enterprises leased 11.44 hectares of land to set up their production factories, up by 10.81 percent over the same period of the last year. Meanwhile, only 2,640 square meters of workshops have been leased, down by 72 percent.

Hepza said it is considering applying some new policies to create most favorable conditions for the domestic enterprises in difficulties to lease their redundant workshops. 18 enterprises reportedly had to suspend their operation in the first half of 2013, according to Hepza, including 11 FIEs.

TBKTSG