K Industrial Complex Established in Vietnam... LH Supports Korean Companies' Settlement

Completion of Hung Yen Clean Industrial Complex
1.43 Million Square Meters of Korean-Style Industrial Zone
Tenants Include Digital Devices and Automotive Industries

Infrastructure construction for the industrial complex being promoted near Hanoi, the capital of Vietnam, has been completed, and full-scale attraction of Korean companies has begun. Vietnam is the third largest trading partner after China and the United States, and is a country where major domestic companies such as Samsung, LG, and Hyundai Motor actively operate local businesses.

The newly established industrial complex has emerged as a key point in the northern economic zone of Vietnam. A consortium of domestic public institutions, centered on Korea Land and Housing Corporation (LH), is participating as the project operator, which has the advantage of reducing uncertainties in overseas expansion.

According to LH on the 14th, the construction of the Clean Industrial Complex (hereinafter Hung Yen Industrial Complex) in Lit Duong Kiet, Hung Yen Province, about 30 km southeast of Hanoi, Vietnam, was recently completed. It has been over eight years since LH signed a cooperation agreement with the local government and local companies in 2017 and steadily promoted the project.

This is the first "Korean-style industrial complex" established by LH to support the overseas expansion of Korean companies, covering an area of 1.43 million square meters (approximately 430,000 pyeong). The development of the industrial complex was undertaken by VTK (Vietnam Together Korea), a joint venture invested by domestic investors including LH (35%), Korea Overseas Infrastructure & Urban Development Corporation (25%), KBI Construction (10%), Shinhan Bank (5%), and TDH Ecoland (25%).

Hung Yen Province is an area where global companies are actively attracted and development projects are underway. The Hung Yen Industrial Complex is about 50 km from Noi Bai International Airport, mainly used in Hanoi, and about 68 km from Hai Phong Port, the largest port in Vietnam. Samsung Electronics' smartphone factories in Thai Nguyen and Bac Ninh, LG Electronics' Hai Phong factory, and Hyundai Motor's CKD joint venture Nanbin Thanh Cong factory are also within a radius of 40 to 60 km.

There are highways and national roads connecting major areas, and construction of the 4th ring expressway connecting the outskirts of Hanoi has been underway since June 2023. It is also the hometown of To Lam, the top-ranking official in Vietnam's power hierarchy and Secretary of the Communist Party. With an economic growth rate of 12.8% in 2022 and 13.4% the following year, it is attracting attention as one of the fastest-growing regions in Vietnam.

Aerial view of Clean Industrial Complex in Hung Yen Province, Vietnam. Aerial photo taken in December last year. Provided by Korea Land and Housing Corporation.

LH has been entrusted by VTK with the authority to recruit and mediate tenant companies, and is responsible for supplying and selecting sites within the industrial complex. Earlier in 2023, VTK received the land use right certificate, equivalent to a registration certificate in Korea. This means that tenant companies can individually secure this certificate, laying a stable foundation for conducting business.

One of the difficulties domestic small and medium-sized enterprises face when expanding overseas is uncertainty surrounding land use. This issue has been resolved as public institutions like LH take the lead in land supply. In Vietnam, the state manages land ownership, so VTK signs land lease contracts with the local provincial government to acquire usage rights and then subleases the land to tenant companies for development.

According to the Hung Yen Industrial Complex side, about 30 Korean companies are expected to move in so far. Companies from various industries such as digital devices, software and digital content, automobiles, motorcycles and parts, industrial robot components, and energy-saving products will be established. The corporate tax rate in Vietnam is basically 20%, but tenant companies in the industrial complex enjoy tax benefits for six years, including a two-year exemption after profit generation and a 50% reduction for the following four years.

Aerial view of Clean Industrial Complex in Hung Yen Province, Vietnam. Aerial photo taken in December last year. Provided by Korea Land and Housing Corporation.

For parts and materials industries or high-spec technology development industries that receive separate certification, there is a tax exemption for the first four years, followed by a 5% rate for nine years and a 10% rate for an additional two years, totaling 15 years of tax benefits. Tenant companies bear costs such as land transfer fees, maintenance costs for infrastructure like roads and water supply/sewage, land lease fees, wastewater treatment fees, and other expenses including water, communication, and electricity. VTK explained, "The Hung Yen Industrial Complex is a government-wide project, and active cooperation is being provided by the provincial government in various permits and approvals."

Meanwhile, the Southeast New City urban development project in Bac Ninh Province, adjacent to Hung Yen Province, began its project planning and feasibility study in December last year. Covering an area of 8 million square meters, it will include housing such as apartments and villas, as well as various commercial and office facilities. LH expects that a consortium will be formed and the project rights secured as early as next year.