Real estate developers pin their hopes on eco-IP regulations

Long Duc Investment Co., Ltd., developer of Long Duc Industrial Park (IP) in southern Dong Nai Province, is working with relevant parties to explore plans to build a green and smart IP project. The aim is to improve the efficiency of industrial waste processing towards zero CO2 emission and energy conservation.

Some industrial areas have already planned to comply with various international sustainability regulations before the country officially introduced the regulations. Photo: Le Toan

“We had working sessions with provincial leaders and the management of Dong Nai Industrial Parks on the proposal to implement smart and green IP. This not only creates a competitive advantage for IP, but also helps to improve the environmental quality for the province’s IP,” said Ishii Hiroyuki, CEO of Long Duc Investment.

Amata Long Thanh City Co., Ltd. also unveils another eco-friendly IP project in Dong Nai that will ensure the waste treatment system benefits from smart technology.

Other industrial infrastructure developers in the area are interested in using ecological criteria to transform development models, including Suoi Tre IP in Long Khanh and Nhon Trach 6 IP in Nhon Trach District.

Although the initial surge in interest in eco-IPs was driven by Decree No. 35/2022/ND-CP of 2022 on the Management of IPs and Economic Zones (EZs), the Ministry of Planning and Investment (MPI) in May this year proposed the development of a special IP law aimed at creating favorable conditions for the construction of eco-IPs that can attract high-quality investment capital flows. This proposal is pending government approval.

According to Vuong Thi Minh Hieu, deputy director of MPI’s Economic Zone Management Department, at a VIR entertainment program held last week, one of the most important effects of the 2022 decree was to encourage the development of new models of intellectual property and economic zones.

“The decree adds the types of specialized IP, high-tech IP, specialized zones and non-tariff zones. It also provides regulations explaining the support and cooperation policy, identification criteria, incentives, certification, order and registration procedures for obtaining eco-IP certification,” Hieu said.

“At the same time, this document clearly stipulates preferential rules for new types of IPs, including provisions on occupancy rate conditions, which are not applied when considering and approving investment planning for new IP models,” Hieu added.

More details are needed

During the talk show, representatives of industrial real estate developers praised the expansion of the regulations, especially the inclusion of the principles for sustainable IP. However, they consider these principles to be a starting point, paving the way for eco-IP, while at the same time emphasizing the importance of developing a dedicated IP and EZ law.

“The development of eco-IP is a mandatory trend, but this model requires a lot of initial capital. Decree 35 does not contain any specific provisions on incentives and preferential loans for developers, so they face barriers in mobilizing green finance,” said Van Nguyen, deputy project manager at real estate firm JLL.

Van said the implementation of segments of the new IP models, such as land clearing, development of housing and workers’ accommodation, reuse of treated sewage and installation of renewable energy system, is facing difficulties due to overlapping provisions of other laws.

“Many foreign investors are impatient when it comes to land clearance and other procedures and may look for opportunities in other countries. Therefore, having a specific law on IP and EZ to avoid overlap is an expected requirement,” Van added.

Pham Hong Diep, chairman of the board of Shinec, the investor of Nam Cau Kien IP in Haiphong’s Thuy Nguyen district, said industrial property developers like Shinec are expecting the new law to come soon.

“It would integrate specific regulations to develop sustainable IPs, as well as apply the circular economy model in parks, so that there is no overlap or dependency on other regulations,” Diep said. “The business community is committed to accompanying the MPI and relevant authorities in the law-making process and will provide opinions based on practical experience to ensure transparency and objectivity.”

Increasing convenience

According to Diep, Nam Cau Kien IP has been operating a circular economy model since 2018. Following the government’s issuance of Decree 35 and the Environmental Protection Law, Nam Cau Kien identified changes that needed to be made and has met all the criteria for eco-IP set out in Decree 35, as well as the criteria set for the development of a circular economy.

“Decree 35 is only a sub-legislative document, so when implementing eco-IP segments and circular economy models in IP, industrial real estate developers face many barriers related to other laws. For example, the reuse of treated waste is regulated by the Environmental Protection Act, while the regulations on the reuse of treated sewage depend on the Ministry of Agriculture and Rural Development,” Diep said.

According to Diep, the construction of housing and accommodation for workers is also a problem. The housing area based on eco-IP standards requires many amenities, including comfort for workers.

“The problem is that the Housing Act regulates that a room for 6-8 people in a dormitory has only one toilet, which is extremely inconvenient,” Diep explained. “However, industrial property developers cannot do anything because of the overlap with the Housing Act. Housing areas in several IPs are often abandoned because the demands of workers are not met.”

Since 2020, MPI has been working with the United Nations Industrial Development Organization (UNIDO) to implement an IP Green Intervention Program with a total budget of $1.82 million. The pilot program has been conducted in Ho Chi Minh City, Can Tho, Dong Nai, Danang, and Haiphong.

Among the IPs selected for the project intervention were Amata IP, DEEP C IP and Hiep Phuoc IP. Technical support was also provided to other IPs involved in the previous UNIDO initiative.

Between 2015 and 2019, MPI, UNIDO and other donors worked on eco-IP pilots in Ninh Binh, Danang and Can Tho. As a result, 72 companies implemented more than 900 energy-efficient and clean production solutions, helping them save US$3.3 million while reducing CO2 emissions by 32 kilotons per year.

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