What Is Industrial Cluster?

Applicable law:

Industrial cluster 

According to Clause 1, Article 2 of Decree 68/2017/ND-CP, the concept of industrial clusters is defined as follows:

“An industrial cluster is a place for production and provision of services for industrial production and handicrafts, with definite geographical boundaries, without inhabitants, and invested and built in order to attract and relocate small and medium enterprises, cooperative groups in production and business investment.

The industrial cluster has an area not exceeding 75 ha and not less than 10 ha. Particularly for industrial clusters in mountainous districts and industrial clusters in craft villages with an area not exceeding 75 ha and not less than 5 ha.”

Features of industrial clusters

An industrial cluster has the basic characteristics of being a small and medium-sized production and business place providing services for the production of industry and handicrafts within a defined geographical boundary, where there are no people living and are under the management of the state and local government.

An industrial cluster is a type of small business in an industrial park. This is a small business and production zone with mainly small factories with investors contributing capital together.

Formed and developed industrial clusters create opportunities and solve job problems for many people, promote economic development, and create a premise for better development of industrial zones. Besides, increasing competition in the market contributes to the economic development of the country.

Fields, industries, trades, production and business establishments encouraged to invest and relocate to industrial clusters

Clause 1, Article 3 of Decree No. 68/2017/ND-CP clearly states that the sectors, industries, trades, production and business establishments that are encouraged to invest in and relocate into industrial clusters include:

– Production and business establishments that cause pollution or are likely to cause pollution in craft villages, residential areas, urban centers and other production establishments need to be relocated to industrial clusters;

– Producing products and spare parts, assembling and repairing machinery and equipment for agricultural and rural production;

– Producing supporting industry products on the list of supporting industry products prioritized for development promulgated by the Government;

– Producing consumer products, using local materials and local labor;

– The industries, trades and products may be strong of the locality, region and other fields, industries and trades in accordance with the local industrial and handicraft development planning;

– Agriculture, forestry and fishery processing industry.

Organizations and individuals investing in production and business in industrial clusters in the fields, industries, trades, production and business establishments are encouraged to invest in, relocate to the industrial clusters are given priority consideration for incentives.

Conditions for establishment of industrial clusters and expansion of industrial clusters

Conditions for establishment of an industrial cluster

­-  Included in the industrial cluster development plan included in the approved provincial planning;

– Having an enterprise or cooperative with legal status, capability and experience in investing in the construction of technical infrastructure or a unit assigned to invest in the construction of technical infrastructure;

– In cases where industrial clusters have been established in a district-level area, the average occupancy rate of industrial clusters shall reach over 50% or the total unleased industrial land fund of industrial clusters is less than 50 hectares.

Conditions for industrial cluster expansion

– Do not exceed 75 hectares, have a land fund suitable to the master plan and plan on land use in the district-level area;

– Having an enterprise or cooperative with legal status, capability and experience in investing in the construction of technical infrastructure or a unit assigned to invest in the construction of technical infrastructure;

– Reach the occupancy rate of at least 60% or the demand for industrial land lease in the industrial cluster exceeds the existing industrial land area of ​​the industrial cluster;

– Complete construction and regular operation of common technical infrastructure works according to approved detailed planning.

Order of establishment and expansion of industrial clusters

About profile

A dossier of application for the establishment and expansion of an industrial cluster includes:

– A proposal for the establishment or expansion of an industrial cluster of the district-level People’s Committee;

– The written request of the enterprise or cooperative to be the investor in the technical infrastructure construction project or the document of the unit assigned to invest in the construction of technical infrastructure of the industrial cluster enclosed with the investment report. invest in the establishment or expansion of industrial clusters;

– A copy of the certificate of establishment or documents proving legal status;

– A copy of one of the following documents: Financial statements of the last 2 years of the investor; commitment to financial support of the parent company; financial institution’s commitment to financial support; guarantee on the financial capacity of the investor; documents explaining the financial capacity of the investor;

– Other relevant documents and documents.

Accordingly, the main contents of the report on investment in the establishment and expansion of industrial clusters include:

– Legal grounds, necessity, assessment of conformity, satisfaction of conditions for establishment and expansion of industrial clusters; the impact of industrial zones in the area on investment efficiency and occupancy rate of industrial clusters;

– Current status of land use, orientation for arrangement of industries and trades with linkage and support in production; land use structure and expected investment attraction in industrial clusters; assess the ability to connect technical infrastructure inside and outside the industrial cluster;

– Determining the target, area, location and scope of investment in construction of technical infrastructure; analyze and select investment plans to build a system of technical infrastructure works; plan on site clearance and resettlement support (if any); the project implementation schedule is consistent with reality and the ability to mobilize resources; the plan, schedule for investment attraction, relocation and occupancy rate of the industrial cluster;

– Assess the investor’s capacity and legal status; estimated total investment, structure, ability to balance and mobilize investment capital sources (including public investment capital, if any) for project implementation;

– Cost of maintenance, operation of the system of technical infrastructure works, other related costs; methods of management, exploitation and use after going into operation;

– Assess the current environmental status, environmental management, waste receiving capacity around the area where the industrial cluster is planned to be established or expanded; forecast waste sources, environmental impacts of industries and trades expected to attract investment in industrial clusters and environmental management plans;

– Preliminary analysis and assessment of economic and social efficiency of industrial clusters; organizational solutions.

About the procedure

Step 1: Send a written request together with the investment report on the establishment and expansion of the industrial cluster

Enterprises or cooperatives that submit a written request to act as the investor in the construction of technical infrastructure or the unit assigned to invest in the construction of technical infrastructure must submit a written request enclosed with the establishment investment report. expand industrial clusters, send them to district-level People’s Committees.

Step 2: Create a profile

Within 5 working days, the district-level People’s Committees shall assume the prime responsibility for, and coordinate with enterprises, cooperatives or units assigned to invest in, construction of technical infrastructure, to compile 8 sets of dossiers of establishment and expand the industrial cluster (in which there are at least 2 sets of original documents), send it to the Department of Industry and Trade to assume the prime responsibility for, and coordinate with relevant departments and branches in, organizing the appraisal.

Step 3: Verify your profile

Within 15 working days from the date of receipt of a complete application for establishment and expansion of an industrial cluster, the Department of Industry and Trade shall complete the appraisal and report to the provincial People’s Committee on the establishment and expansion of the industrial cluster.

In case the dossier and contents of the report on establishment and expansion of the industrial cluster do not meet the requirements, the Department of Industry and Trade shall send a written request to the district-level People’s Committee to supplement and complete the dossier. The time limit for supplementing and completing the dossier is not included in the appraisal time.

Step 4: Decide to establish and expand an industrial cluster

Within 5 working days from the date of receipt of a dossier of establishment and expansion of an industrial cluster and the appraisal report from the Department of Industry and Trade, the People’s Committee of the province shall decide or not decide to establish or open an industrial cluster. industrial cluster expansion. The decision on establishment and expansion of an industrial cluster shall be sent to the Ministry of Industry and Trade 1 copy.

In case an industrial cluster is established or expanded with an adjusted area of ​​5 ha larger than the plan for development of an industrial cluster located in the industrial cluster development plan is included in the approved provincial planning then the People’s Committee of the province shall have a written agreement with the Ministry of Industry and Trade before approving it.

Investment incentives

  • For production and business investment projects in industrial clusters

Investment projects in production and business in industrial clusters are exempted from land rent for 7 years and enjoy other incentives as prescribed by law. In case of multiple preferential rates, the highest preferential rate shall apply.

  • For investment projects on business and technical infrastructure of industrial clusters
  • Investment projects on business and technical infrastructure of industrial clusters are exempted from land rent for 11 years, may be considered for loans from the State’s investment credit capital at a rate not exceeding 70% of the total investment, and enjoy other incentives according to regulations. provisions of law. In case of multiple preferential rates, the highest preferential rate shall apply.
  • Projects on construction of technical infrastructure of industrial clusters are considered for investment in the form of public-private partnership.

Distinguish between industrial clusters and industrial zones

CriteriaIndustrial clustersIndustrial Park
ConceptAn industrial cluster is a place for production and provision of services for industrial production and handicrafts, with definite geographical boundaries, without inhabitants, and invested and built in order to attract and relocate. small and medium enterprises, cooperatives, cooperative groups in production and business investment. (Clause 1, Article 2 of Decree 68/2017/ND-CP)An industrial park is an area with definite geographical boundaries, specialized in manufacturing industrial goods and providing services for industrial production, established under the conditions, order and procedures specified in this Decree. Clause 1, Article 2 of Decree 82/2018/ND-CP)
AcreageThe maximum area is 75 haMinimum area is 10 hectaresFor industrial clusters in mountainous districts or industrial clusters in craft villages, the minimum area is not less than 5 hectares.There is no specific regulation on the maximum or minimum area of ​​the industrial parkIndustrial zones can be fully expanded when meeting the requirements of the approved development planning.
The business operatesConcentrate on small and medium enterprises, mainly industrial production – handicrafts. Mainly agro-forestry-fishery processing industryMainly large enterprises – serving industrial production
FunctionProducing products – spare parts for agricultural machinery and equipmentIndustrial production and services for industrial production. There are no agricultural, forestry and fishery production activities
Conditions of establishmentThe planning on construction of industrial clusters must be approved by the State; There are investors to build infrastructure; Capable of filling 30% of the business after 1 year of establishmentIndustrial zone construction planning approved by the Government; have a comprehensive system of mechanisms and policies; have synchronous infrastructure
For export processing enterprisesNot allowed to operate inside the industrial clusterExport processing enterprises are allowed to establish and operate inside industrial parks

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