Green and sustainable development requires industrial parks to take measures to encourage the enterprises that they host to switch to clean, environmentally friendly and resource-efficient manufacturing.

But industrial parks across the country are still struggling with how to reach a balance between economic benefits and the environment due to numerous obstacles.

Identifying bottlenecks

Industrial parks are playing an important role in diversifying investment in infrastructure development, manufacturing, and business, and are attractive destinations for both domestic and foreign investors.

Green, clean and ecological industrial parks are an inevitable trend around the globe. The development of sustainable industrial parks commences from industrial ecology and the transition from the linear economic model to the circular economy, in which the waste and byproducts of an enterprise become the inputs for another one’s production process.

These are urgent and mandatory requirements for the manufacturing sector to develop sustainably, helping to realise Vietnam’s goal of net zero emissions by 2050. To meet these requirements, the government and enterprises need to join hands since financial resources and regulations are the current bottlenecks to the transition.

Tran Thi To Loan, Deputy Director of Sao Do Investment Group, owner of Hai Phong-based Nam Dinh Vu Industrial Park, said cost is the biggest hurdle to the transition from conventional industrial parks to sustainable ones. She noted that the two models are fundamentally different in terms of approach, goal, and environmental and social impacts; one only focuses on maximising profits and economic growth with a low spending on the environment, while the other is designed and managed with the combined goals of economic development, environmental protection, and social responsibility.

A green, ecological and sustainable industrial park requires synchronous investment from the start with a huge cost. But most industrial parks in Vietnam are developed in a rolling process, so they are not truly environmentally friendly and resource-saving.

Legal bottlenecks and unclear regulations also make it difficult for changing the model of industrial parks in Vietnam. Loan stated that if regulations are not specified, it is difficult to encourage enterprises to change.

Associate Professor Nguyen Quang Tuyen from the Hanoi Law University shared the same view that the current legal network lacks specific regulations on developing sustainable industrial parks. In addition, there are too many laws governing the operation of industrial parks, which also discourages many enterprises.

Prioritising green and ecological industrial parks

Vice Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Nguyen Quang Vinh said building sustainable industrial parks will bring many substantial benefits, not only economic, but also environmental and social.

Specifically, it will reduce the environmental impact, save energy and resources, increase innovation and cooperation, enhance reputation and brand image, create a better working environment in industrial parks, and offer many benefits to the community.

However, enterprises’ awareness about this matter remains weak, with up to 50% of surveyed enterprises in industrial parks having responded that they have not heard about the idea of sustainable and ecological industrial parks. Therefore, the government should soon introduce measures to address obstacles and facilitate industrial parks in their transition.

For enterprises, investing in sustainable development requires huge financial resources but it should not be the reason for them to stay outside the trend. With about 418 established industrial parks, 298 of which have been put into operation covering a total of 92,200 hectares, Vietnam is assessed to have much room for developing green, ecological, and sustainable industrial parks.

The transition to the green and ecological industrial park model also helps attract a new wave of investment, especially high-quality foreign direct investment. Therefore, first of all, investors of industrial parks need to get updated on the government’s orientation to understand the benefits of changing the model in order to proactively build a roadmap for green and ecological industrial parks.

Enterprises in industrial parks need to focus on changing their production methods to maximise resources and make their production cleaner, apply technology solutions that use less carbon and chemicals, and use renewable and environmentally friendly energy to reduce operating costs and enhance competitiveness.

Afterwards, enterprises need to step up mobilising resources from international organisations, trade associations, climate finance funds, energy transition partners as well as commercial banks and green finance organisations to develop green industrial parks. They should also work together to share production infrastructure and reuse production materials, or work with third-party enterprises outside industrial parks in realising industrial symbiosis connections.

Associate Professor Nguyen Dinh Tho from the Institute of Strategy and Policy on Natural Resources and Environment shared that it is necessary to plug the legal loopholes and remove the bottlenecks to the industrial park transition process, in which specific institutions should be introduced as the basis for enterprises to implement and operate. More importantly, the government needs to supplement preferential policies on land, finance, corporate income tax, land rents, and credit access in the process of changing the production model from “brown” to “green”.

Along with the development of infrastructure in economic zones and industrial parks, the issue of water security is of concern to localities because the demand for water resources for industry is a challenge that needs to be solved in conjunction with appropriate policies and solutions.

The central coastal provinces of Quang Nam, Quang Ngai, Binh Dinh and Khanh Hoa have 28 economic zones and industrial parks, spanning more than 16,880 hectares, attracting nearly 1,200 projects, with a total investment capital of over VND 623,800 billion, equivalent to 25.35 billion USD. The economic zones of Van Phong, Dung Quat, Chu Lai, and Nhon Hoi, along with many other industrial parks, are the driving force for the strong economic development of the region.

Water demand in industry and services increases

In recent years, the demand for water in industrial production, business and services has increased sharply in the central provinces. In addition, the requirements for sufficient and stable water sources for production, business, and water quality are also of greater concern to investors and enterprises. Currently, the total water demand for industrial production in the provinces of Quang Nam, Quang Ngai, Binh Dinh and Khanh Hoa is about 194 million cubic meters per year. The key economic zone focuses on many heavy industrial projects such as steel, mechanics, automobiles, petrochemicals, seaport services, industrial urban areas, etc., so the demand for water has been increasing by 20-30% in each phase of investment attraction.

In Quang Ngai Province, economic zones and industrial parks need 94 million cubic meters of water per year. The greatest demand is in steel production, pulp, equipment manufacturing, and petrochemicals. In Dung Quat Economic Zone, Hoa Phat Group has invested more than 7 billion USD in the Hoa Phat Dung Quat Iron and Steel Complex. This is the project with the largest water demand in Quang Ngai Province, at about 73 million cubic meters per year.

Ho Duc Tho, Deputy General Director of Hoa Phat Dung Quat Steel Joint Stock Company, said: The project receives and uses raw water from Tra Bong River, with phase 1 using about 23.7 million cubic meters per year. This is the amount of water compensated by evaporation, deducting the amount of water circulated and reused. If water is not recovered and reused, the project’s water demand would be one million cubic meters per day and night.

Quang Nam Province currently has 13 industrial parks, including 10 industrial parks in Chu Lai Open Economic Zone, attracting 255 secondary investment projects, with total registered capital of VND 85,100 billion. The total water demand for industrial production in Chu Lai Open Economic Zone, Quang Nam Province, is about 38,000 m3/day and night.

Ngo Van Hai, Deputy Director of Chu Lai Truong Hai Industrial Park and Urban Infrastructure Development Investment One Member Co., Ltd., said: THACO Chu Lai Industrial Park invests in the fields of automobile manufacturing and assembly, mechanical engineering and supporting industry, agricultural and forestry processing, etc., with total investment capital of more than 4.2 billion USD. Each year, this industrial park uses 767,500 m3 of water, supplied from the two water plants of Tam Hiep and Tam Xuan. With the increasingly expanding scale, the demand for water in the industrial park in the next 10 years is about 10.5 million m3/year.

According to the Nguyen Hong Quang, Head of the Management Board of Economic Zones and Industrial Parks of Quang Nam Province, the demand for water for industry and services is increasing. The water source for Chu Lai Open Economic Zone is relatively favourable, the raw water is mainly exploited from the surface water of Phu Ninh Lake and Thai Xuan Lake with abundant and good quality reserves. Other industrial parks use surface water sources in the surrounding area according to the planning orientation of the province. The raw water source ensures the flow and quality to supply to the water plant serving the industrial production of investors.

Ensuring stable water supply

Along with the construction of infrastructure for economic zones and industrial parks to attract investment, the central coastal provinces of Quang Nam, Quang Ngai, Binh Dinh and Khanh Hoa prioritise resources and investment in water supply and drainage infrastructure to ensure sufficient and stable supply of raw water and clean water for industrial production, trade and services. Many provinces and cities attract investors to build and upgrade factories, transmission systems and water supply stations; at the same time, zoning water supply to ensure security and safety of water sources, preventing water source disputes.

The dense network of rivers and streams, tributaries of Phu Ninh Lake, Vu Gia-Thu Bon River system in Quang Nam Province; large reservoirs of Hoa Son, Da Ban, Cam Ranh, Suoi Dau, Ta Ruc and water from Cai Nha Trang River in Khanh Hoa Province; and Tra Bong River and Tra Khuc River in Quang Ngai Province, with large water reserves, are valuable hydropower sources for agriculture and industry.

Water security is one of the important conditions to increase competitiveness in attracting investment among localities. As soon as the economic zones and industrial parks were established, the central coastal provinces calculated how to solve the strategic problem of electricity, transportation and water systems for 20-30 years. The three provinces of Quang Nam, Quang Ngai and Binh Dinh have 19 water plants, supplying 147.8 million cubic meters for industrial production and services. Nhon Hoi Economic Zone and seven industrial parks in Binh Dinh Province have a large-scale water treatment plant system, including Phu Tai Water Treatment Plant, Binh Dinh Ward Water Treatment Plant, and Quy Nhon Clean Water Plant, with a capacity of more than 37.6 million cubic meters of water per year, meeting the basic needs of industrial parks and industrial clusters in the area.

Le Tien Dung, Director of Binh Dinh Water Supply and Drainage Joint Stock Company, said that the demand for clean water is increasing in Quy Nhon City and the nearly Becamex Industrial Park with the trend of developing services, urban areas, industrial parks. Therefore, innovating production technology and providing stable and safe water for production is the top priority today.

The river and lake system has abundant raw water reserves, Quang Nam Province and Quang Ngai Province are upgrading and expanding water infrastructure, and dividing water supply zones for economic zones and industrial parks. Quang Nam Water Supply and Drainage Joint Stock Company has 11 water plants, with a total design capacity of more than 40 million cubic meters per year, providing enough water for Chu Lai Open Economic Zone, industrial parks, and industrial clusters in the province.

In addition, Quang Ngai Province has Tra Bong River and Tra Khuc River, with a total length of 204 km, and 126 reservoirs, with a total flow of about 403 million cubic meters of water, which can supply 94 million cubic meters for industry and services each year. According to Hoang Nguyen Linh Chau, Director of Vinaconex Dung Quat Joint Stock Company: Dung Quat Water Plant has a capacity of 5.5 million cubic meters per year, providing water for industrial production and main services for Dung Quat Economic Zone. From 2020 to now, the unit has supplied 17 million cubic meters of water to 50 factories and enterprises, reaching 70% of capacity.

Many enterprises in the economic zone have invested in their own water supply systems, so the plant currently only supplies to key projects such as Dung Quat Oil Refinery and auxiliary manufacturing plants. If there are many large investors, the unit will upgrade and increase the water scale accordingly according to the needs of the enterprises.

The three key economic zones of Nha Trang, Cam Ranh and Van Phong in Khanh Hoa Province aim to become the economic centre of the South Central Coast, the Central Highlands, and the whole country. The province is taking the initiative in water resources to ensuring the needs of investors and businesses are met. Water sources are mainly taken from rivers and a system of 10 reservoirs and irrigation dams, providing about 25 million cubic meters of raw water each year for industry and services.

According to statistics from the central coastal provinces, the current demand for water for industry has not fluctuated much, with the actual demand being lower than that registered by investors. Many businesses are applying water-saving circulation systems and reducing wastewater to reduce wastewater treatment costs, so the capacity to meet the demand for raw water and clean water is stable for industrial production and services in the region.

Nguyen Tu Cong Hoang, Vice Chairman of the People’s Committee of Binh Dinh Province, said Binh Dinh Province is focused on investing in the water supply system and putting water plants into operation, in order to concretise the approved Urban and Industrial Park Water Supply Planning Project. In addition, the province focuses on developing water supply infrastructure, exploiting and using water resources effectively, contributing to improving the capacity to provide clean water sources that ensure standards, standards, and safe water supply for people and production and services.