Foreign investors learn about investment opportunities in Hoa Lac Hi-tech Park through... model

LookAtVietnam Bridge – Established in October 1998, the Hoa Lac Hi-tech Park was hoped to become a technological hub like Silicon Valley in the US that would help stimulate industrialization and modernization.

However, ten years after its establishment, Hoa Lac seems to have left no impression. Nguyen Van Lang, Deputy Minister of Science and Technology, Head of the Hoa Lac Hi-tech Park Management Board discussed this situation.

Ten years have passed and hopes about the Hoa Lac Hi-tech Park are fading, why?

There are many reasons for Hoa Lac’s sluggishness. The biggest reason behind this is slow site clearance, with only 200ha in 10 years. Investment in infrastructure is less than expected, under VND200 billion (US$12.5 million).

This was our first hi-tech park, and that made it very difficult to develop. For a normal industrial park, we only need to do site clearance, build roads and other infrastructure facilities and invite investors, on the condition that they are industrial projects. But for a hi-tech park like Hoa Lac, we have to implement a methodical plan. The function of Hoa Lac is training sci-tech resources, performing research and development activities as well as developing software parks, hi-tech zones and service zones to serve hi-tech enterprises, etc.

To develop a hi-tech park, good infrastructure is required, but Hoa Lac’s infrastructure is lacking. Additionally, the park is located in an unfavorable location. When it was established, there were no roads to the park, and now, the roads are still lacking. The park is 30km from Hanoi, 47km from the Noi Bai International Airport and 152km from Hai Phong, which is why it has developed so slowly.

In the past year, the Government has made several decisions aimed at speeding up the construction and development of Hoa Lac. How have they affected the park?

Last year was good for Hoa Lac thanks to the Prime Minister’s important decisions. In August 2006, only a month after taking office, Prime Minister Nguyen Tan Dung paid a visit to Hoa Lac and made some bold decisions. The first, which I thought was very accurate and sound, helped make outstanding changes to Hoa Lac in terms of allocating site clearance tasks to Ha Tay provincial authorities, where the park is located.

Thanks to the decision, in only the last year, 262ha of land was cleared, compared to 200ha the year before. That is a record. If nothing changes, this year we will have 800ha more. Last year, the Government invested nearly VND100 billion ($6.25 million) in infrastructure. Thanks to the above factors, last year, Hoa Lac exported chipsets and main-boards worth $10 million. Later this year the park will start producing software products.

However, it seems investors don’t pay attention to Hoa Lac?

Representatives of more than 500 companies visited Hoa Lac in 2007 but only five investors were licensed, totaling over $200 million of capital. We are about to license 3-4 others with around $250 million of investment capital.

After Tet, the construction of several factories and the service zone was kicked off. Many software, service, new material and chipset factories have begun operating. Projects in Hoa Lac may be not big (the largest is worth only $200 million) but the investment rate of over $10 million per hectare is high compared to Vietnam’s average investment rate of less than $2 million per hectare. We are trying to raise that number to $15-20 million per hectare.

This year, the Prime Minister will approve the amended construction plan for Hoa Lac, which will pave the way for the park’s future development. This is something Hoa Lac has lacked in the past. This year we will double the investment in Hoa Lac’s infrastructure. From now to the end of April, around $500 to $600 million may be licensed.

But there are still no big names investing in Hoa Lac?

Hoa Lac is very different from other industrial zones. Inside Hoa Lac there are hi-tech zones of 300ha. Hoa Lac is different because it has research institutes, a university, a software park, and a sci-tech nursery center. So Hoa Lac has to choose investment projects not only based on scale but also the type of project.

Do you think it was regrettable for Hoa Lac that Intel initially planned to invest here, but then decided to invest in the HCM City Hi-tech Park instead?

Intel is a world leading transistor electronic manufacturer, so if they invested in Hoa Lac other investors would have as well. However, their problems with Hoa Lac mostly involved infrastructure, which is admittedly weak, so they chose HCM City.

I think Hoa Lac will have it share of opportunity in the next few years. Vietnam’s policies have opened this economy, and more foreign investors will realize this and inject capital here. Intel is not the only investor in the world.

But Hoa Lac will have to compete with hi-tech parks of regional countries?

Each nation and each location has its time. Several years ago, China was the primary destination of investors. At that time, they possessed many advantages, like low labor costs, good infrastructure and adequate policies, but now these advantages are no more. China’s labor cost is now high and policies have been adjusted so investors don’t want to put all their eggs in one basket anymore. Japan and Taiwan invested in China and now they are investing in the third countries, a formula called “China + 1”. And that third country may be India, Thailand or Vietnam.

After considering all the factors, Vietnam is often thought more advantageous due its political stability, open policies, WTO membership, seat on the UN Security Council, cheap labor cost and the young population. Our next goal is training workers to meet the requirements of hi-tech investors. If we can do all of this, we will succeed.

What are the notable characteristics of Hoa Lac?

Considering the US’ hi-tech industry, people often think of the Silicon Valley. Talking about the scientific revolution in India, Bangolar, the world’s leading software producing center, is often mentioned. About China, Trung Quang Thon is very famous, where 800,000 people create over $100 billion a year, 39 universities teach the next generation of tech works, many research institutes explore the future of the industry and software parks of over 130ha output huge numbers of products every year.

Taiwan has Tan Truc, that earns nearly $40 billion a year. Japan has Tsukuba, boasting many universities, research institutes and many Nobel laureate winners. If everything goes smoothly, Hoa Lac will have a similar reputation, a satellite of Hanoi in terms of science and technology.

(Source: TT)