The Government has cleared a HCM City administration proposal to upgrade the automotive industry cluster in Cu Chi district into an industrial park.

The decision, a possible turning point in the development of the mechanical engineering industry, will see the new IP added to a list of industrial parks to be given priority for establishment by 2015.

Industrial clusters are set up by local administrations as opposed to IPs which are set up by the central government.

The Cu Chi cluster, established in 2007, is 113 hectares in size and spreads over the two communes of Hoa Phu and Tan Thanh Dong.

Vu Ngoc Hieu, director of the Phu Hoa Joint Stock Company which owns the park, said it housed companies manufacturing automobiles, auto components, and transport equipment.

Around 40 percent of its internal road network had been built as had been a road linking the cluster with provincial Highway No 8.

It had in place a drainage system, a systerm of waterworks with a daily capacity of 2,500 cubic metres and a water supply system, and electricity and telecom services.

Two firms are already there, one is a specialised vehicle factory with an investment of 200 billion VND (9.60 million USD) set up by the Sai Gon Transportation Mechanical Corporation (Samco), and the other, a plant manufacturing water-related equipment and components set up by the Hiep Luc Mechanical Company.

The park, due to open in January 2012, will have new incentives to attract both foreign and domestic investors, Hieu said.

For instance, rent will be waived for the first five years for small and medium-sized enterprises.

The rent was fixed at 55 USD per square metre for the park's 50-year life span.

His company will help enterprises with technology transfers from developed countries like Japan . /.