Small foreign firms opt to lease space

The number of new foreign-invested enterprises leasing land for factory construction in Ho Chi Minh City fell considerably in the first half of the year, while those choosing to lease reedy-built plants rose sharply, according to a new report.
The number of new foreign-invested enterprises leasing land for factoryconstruction in Ho Chi Minh City fell considerably in the first half ofthe year, while those choosing to lease reedy-built plants rose sharply,according to a new report.

The city’s Export Processing andIndustrial Zones Authority (HEPZA) said that a majority of newforeign-invested projects leasing factories from industrial parkinfrastructure developers are small- and medium-sized enterprises (SMEs)in support industries.

In the first half of the year, theacreage of total land leased to the FDI sector at IPs and exportprocessing zones in HCM City was only 3.9ha (39,000sq.m), a sharp dropof more than 55 percent year-on-year.
However, the totalarea of ready-built factory space for lease was nearly 18,200sq.m, anincrease of more than 161 percent.

Many of these enterprisesare still in the process of exploring investment prospects and lookingfor outlets for their products. Thus, many of them want to only leasespace for trial production for two to three years.

If their business fares well, they will then expand or build their own plants at a later date.

Most of these SMEs are from Japan, the Republic of Korea and Taiwan.

The number of FDI companies using ready build factories in IPs isincreasing and many of them have leased factories that were formerlyused by local companies that had to close because of the recession.
HEPZA said it would focus on working with companies to develop qualityfactories to lure more foreign SMEs in the support industries.

The authority said it would cooperate with Japanese infrastructuredevelopers to build quality plants tailored to the needs of Japaneseinvestors at the Hiep Phuoc Industrial Park.

In contrast, thearea of land leased to local companies has totalled 11.44ha this year,an increase of 10.81 percent year-on-year, while the total area ofplants leased by local firms has risen to 2,640sq.m, tumbling nearly 72percent, according to HEPZA.-VNA

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