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Developing Economic Zone and Industrial Park in Thanh Hoa Province (Vietnam) towards Green Growth

LE Thi Lan*, TRINH Tuan Sinh

Faculty of Economics and Business Administration, Hong Duc University, Thanh Hoa City, Vietnam

Abstract: Green growth is the current development trend of countries in general and Vietnam in particular, aiming to effectively use natural resources, contribute to poverty alleviation and create a driving force for sustainable economic development. The development of economic zone (EZ) and industrial parks (IPs) in Thanh Hoa has contributed significantly to attracting investment, developing the local economy, creating jobs, and social security. However, the development of these zones also creates consequences on environmental pollution and inefficient use of local resources. This article provides a picture of the current development situation of EZ and IPs in Thanh Hoa, as well as solutions to develop them in the direction of Green growth.

Keywords: economic zones, industrial parks, green growth, thanh hoa provice

Received June 02, 2021; Revised July 05, 2021; Accepted July 18, 2021

Citation: LE Thi Lan, TRINH Tuan Sinh, Developing Economic Zone and Industrial Park in Thanh Hoa Province (Vietnam) towards Green Growth. Journal of Finance and Economics, 9 (4). 140-145. January 2021. doi:10.12691/jfe-9-4-3

1. Introduction

Thanh Hoa province is located in the North Central region of Vietnam, has 3 ecological regions, ranks 5th in area, 3rd in population compared to administrative units directly under the Central Government (area is 11,129.48km2, population is over 3.6 million people. Thanh Hoa has 27 districts, towns, cities; 559 communes.The growth rate of gross domestic product (GRDP) in 2020 will reach 6.08% (the highest in the North Central region of Vietnam); Industrial production value is estimated at 141,640 billion VND; The production value of the whole agricultural sector reached 29,129 billion VND, the total food output was estimated at 1.57 million tons; Export and import turnover reached 3.76 and 5 billion USD respectively [1]. In the context of increasingly complex and unpredictable climate change, the requestments of globalization and international economic integration require economies to transform their growth models towards greening and reducing greenhouse gas emissions; Vietnam in general, and Thanh Hoa province in particular pay special attention towards socio-economic development in the direction of Green growth.

Now, in Thanh Hoa province, there are 1 economic zone (Nghi Son EZ) and 08 industrial parks (IPs), of which 01 Nghi Son EZ and 05 industrial parks are officially in operation. According to the report of the Department of Natural Resources and Environment of Thanh Hoa province, by the end of 2019, out of the 08 industrial zones, 01 industrial park (Le Mon Industrial Park) has completed and operated a centralized wastewater treatment station, and 02 IPs completed in the stage of construction, installation and commissioning, the remaining IPs are waiting for investment. This shows that the management of environmental issues in industrial parks has not had enough conditions to fully implement, so in the coming time, if Thanh Hoa want to achieve the goal of developing industrial parks in the direction of green growth, the province needs to pay more attention to finding conditions and strengthening the management and development of this issue in EZ and IPs. This article clarify the development status of economic zones and industrial parks in the area from the development perspective in the number of economic zones and industrial zones; the development of businesses in the area, the management of waste treatment; the area of green trees in the zone; index of manufacturing and processing enterprises according to Green growth standards.

2. Green Growth Overview

Green growth is a new approach of mankind in the 2000s, but it is not separate from the traditional concept of sustainable development. Green growth is approached by many different organizations and governments, so there are many different definitions. Statistics of UNDESA (2012) show that there are at least 13 different official definitions of green growth by countries and organizations around the world [2]. For example, according to World Bank (2010), green growth is an efficient, clean and resilient growth model – efficient in the use of natural resources, clean in reducing the impact of environmental pollution, and being resilient, resistant to natural disasters by respecting the absolute limit of the ecological environment [3].

Green industry or green growth-oriented industrial development is defined as the development of industrial production without harming the natural environment as well as causing harmful consequences to the health of human. Green industry aims to integrate environmental and social issues into the activities of enterprises and industries [4]. Also according to UNIDO (2011b), two main contents of green industry, including: (1) Greening existing industries:renovating existing industries towards improving production and environmental efficiency, and reducing health risks and (2) Creating green industries: forming a system of new green industries such as renewable energy, management, transportation, recycling, air pollution control, providing environmental quality monitoring, measurement and analysis services [5].

Hart, SL, & Ahuja, G. (1996) summarized theoretical and empirical studies, and offers two basic measures to reduce waste, including: (i) Control, meaning that waste will be stored, treated and disposed through waste control facilities; and (ii) Prevention, meaning that waste will be reduced, transformed, or replaced within the production process by investing in appropriate production technology [6]. Thus, with any measure, the greening of production activities requires enterprises to invest in equipment and/or improve technology. Policies to promote greening of production activities must be able to adjust the industrial production process in the direction of reducing hazardous waste to the environment, policies must promote enterprises: (i) Investment in new production technology in the direction of waste minimization or mandatory regulations on investment in a waste treatment system connecting the output of the production process and the absorption of the natural environment; and (ii) Investment in finance and human resources to control the process of resource exploitation and discharge of enterprises to the natural environmentof local.

Green growth is a trend of many countries around the world, specifically countries such as Korea, Japan, China, etc. in Asia; Germany, UK, France, Netherlands... in Europe have been pioneers in promoting green growth with many important contents showing strong commitment towards green economy [7]. Green growth in Vietnam has also received the attention of local authorities at all levels and is specified through the building of institutions and legal documents for the implementation of green growth, and was formed with the Resolutions of the Party, the National Assembly, laws, decrees and circulars in such areas as: the National Strategy on Green Growth for the period 2011-2020 and a vision to 2050; National action plan on green growth for the period 2014-2020; National target program on economical and efficient use of energy [8,9].

3. Development Status of Economic Zones and Industrial Parks in Thanh Hoa Province towards Green Growth

3.1, Development Results in Number and Size of Economic Zone and Industrial Parks

In the development orientation, Thanh Hóa province will focus resources to invest in developing 8 industrial parks with a total area of about 2,035 hectares with relatively synchronous infrastructure. 100% of industrial parks have centralized wastewater treatment systems [10].

According to the data from Figure 1, the number of industrial parks in Thanh Hoa province grew rapidly from 2011-2016 at the rate of 14.3-100% during this period (including newly planned industrial parks). The number of EZs and IPs has increased from 2 (in 2010) to 9zones. From 2017 up to now, IPs have not grown in number but focused on attracting investment and developing activities inside the zones.

Figure 1. Development situationof the number of industrial parks in Thanh Hoa Province (Source: Management Board of Nghi Son EZ and IPsperiod 2011-2020 [11])

Table 1. Number and size of industrial zones in Thanh Hoa province in 2020

Total area of economic zones and industrial parks in Thanh Hoa province is 108,082.04 ha, of which Nghi Son EZ has the largest total area of 106.00 ha, equivalent to 98.07%. This is a large planned economic zone that is the focus of local investment attraction in the past time and continues in the period of 2020-2035.

About the total number of investment projects registered in Thanh Hoa industrial park is 644 projects. In which, the number of projects registered in Nghi Son EZ is the highest with 265 projects, accounting for 41.15%, the second is the number of investment projects in Dinh Huong - Tay Bac Ga Industrial Park with 270 projects.

Regarding the number of businesses operating in the area, Dinh Huong - Tay Bac Ga Industrial Park has the highest number of enterprises with 250 operating enterprises (accounting for 57.47%), and followed by Nghi Son EZ.

Regarding the occupancy rate, the industrial zones established before and near the city and town centers such as Le Mon Industrial Park, Dinh Huong - Tay Bac GaIndustrial Park, Bim Son Industrial Park have quite high occupancy rates (58.01-100%). Nghi Son EZ is prioritized by special institutions, so it is also an attractive destination for investors, so the occupancy rate is quite good (55%, old area, 15% expanded area).

Thus, in the period 2011-2020, Thanh Hoa EZs and industrial parks have a rapid growth in the number of zones as well as the number of registered investment and operating enterprises. This development contributes to the local economic development.

3.2. The Development of Enterprises inThanh Hoa Economic Zone and Industrial Park

Accumulated up to now, Nghi Son EZ and industrial parks in the province have attracted 644 projects. In which, domestic investment projects with a total registered investment capital of 156,489 billion VND, foreign investment projects with a total registered investment capital of 13,447.5 million USD; realized capital for domestic investment is 63,562 billion VND, realized capital for foreign investment projects is 11,184.9 million USD.

The value of industrial production, services and trade of economic zones and industrial parks in Thanh Hoa in 2020 is 207,285 billion, increased by 9.03 % compared to 2019; payment to the state budget reached 16,465 billionVND, down 3.8% compared to 2019; Export turnover is estimated at 2,681 million USD, up 34.1% compared to 2019; Import was estimated at USD 5,100 million, up 13.34% over the same period; the total number of employees working in the economic zone and industrial zone is about 96,000 people, the average income is 5.7 million VND/person/month.

Figure 2. Industrial production value and budget payment of industrial zones in Thanh Hoa province (Source: Management Board of Nghi Son EZ and industrial parks 2011 – 2020 [11])

Table 2. Registered capital for investment at EZ, IPs in Thanh Hoa province

Nghi Son economic zone is considered as the center of local development. Specifically, the production value of enterprises in Nghi Son EZ in the past 10 years (2010-2019) reached VND 499,077 billion, equal to 18% of the total production value of the province in the same period, in 2020 alone reached VND 155 trillion, 28.2 times higher in 2010, and equal 28.9% of the province's production value. Export value of enterprises in Nghi Son EZ increased by 34.2% per year on average, currently estimated at $1.59 billion, equaling 38.8% of the province's total export value, 18.9 times higher than in 2010; Budget revenue in Nghi Son EZ in the past 10 years is estimated at 58,936 billion VND, equal to 40.1% of the total budget revenue, in 2020 alone will reach 15,565 billion VND, 152.3 times higher than in 2010, equaling 68.4% of budget revenue the whole province, creating regular jobs for 32,000 workers [12].

3.3. The Current Situation of Management and Coordination in the Treatment of Waste, Wastewater and Emissions Generated from Ezs and IPs in Thanh Hoa Province

a) Wastewater, emissions

Among 08 industrial parks and 01 economic zone in Thanh Hoa, there are 02 industrial parks, namely Le Mon Industrial Park and Bim Son Industrial Park, which have basically invested in a centralized wastewater treatment system.

Regarding emissions, at present, most of the factories in the industrial parks in Thanh Hoa have taken measures to treat emissions before being discharged into the environment, with almost no direct emission.

Currently, in factories, special production and processing zones that use chemicals, there are almost no measures to protect workers' health.

b) Solid waste

Currently, the total amount of solid waste in industrial parks is estimated at 425.39 tons/day, equivalent to 155,267 tons/year. In which, about 15-20% is hazardous solid waste.Besides, the landfills in the closed industrial zone are almost overloaded, on the other hand, these landfills only have the function of storing and treating domestic waste.

Thus, the problem of exhaust gas treatment of Thanh Hoa EZ and IPs has been basically solved, but the problem of wastewater and solid waste needs more effective treatment solutions.

3.4. The Current Situation of Implementing the Target on Green Area and Number of Projects Meeting Environmental Protection Standards

Responding to the National Green Growth Strategy and Green growth action program of Thanh Hoa, the Management Board of Nghi Son EZ and industrial parks in Thanh Hoa province reviewed the activities of businesses and investment projects to ensure environmental protection standards. Prioritize for projects using new and environmentally friendly technologies, and restrict and recommend to projects that have not yet met the standards. Currently, basically 100% of investment projects ensure registration standards.

In addition, the planning of natural areas for hills, rivers, lakes and green trees has also been paid attention. However, the percentage of green areas in industrial zones in Thanh Hoa is still limited. The old industrial zones have reached the target of 10% or more of the green area, but Nghi Son EZ alone is still limited. Measures to increase the area of industrial green trees of the EZ may consider planning to take advantage of the available natural green area of the IPs to reduce the cost of planting trees.

Table 3. Status of wastewater and emissiontreatment in Thanh Hoa’s EZs and Industrial Park

Table 4. Indicators of green area and number of projects meeting environmental protection standards of Thanh Hoa EZ and IPs

Table 5. Green growth indicators of enterprises in Thanh Hoa’szones

3.5. Actual Situation of Implementing Green Growth Targets of Enterprises in Industrial Zones in Thanh Hoa Province

The synthesis results of the main criteria for the operation of enterprises in Thanh Hoa Industrial Park show that the enterprises that meet the criteria for high quality output products, with very few new materials (7.59%).

There are not many enterprises that can implement the group of criteria on innovation of technical equipment to increase labor productivity, manufacturing new and high-tech technologies (only 46 enterprises, accounting for 10.57%).

Enterprises that meet environmental criteria in accordance with green growth standards are also limited with 32/435 enterprises, accounting for 7.36%.

The number of enterprises recycling waste and by-products stands at 172/435 enterprises, accounting for 39.54%. However, this is only the data of enterprises that having a recycling process, but the rate of use in each enterprise is still low.

For internal management system, the percentage of enterprises with this system is quite high, accounting for 78.39%. This shows that although the technology is not really modern, the enterprises in the IPs are all large enterprises, so they are very interested in the management and saving of energy in production.

The data in Table 5 shows that enterprises in Thanh Hoa EZ and Industrial Park achieve relatively low rates of production and processing according to green growth criteria. However, Table 5 also shows that enterprises in Nghi Son EZ always have better green growth indicators than enterprises in other industrial parks. This is also a positive sign because most of firms in Nghi Son EZ are large and FDI enterprises. This is also a signal that the following investment enterprises have paid more attention to the Green growth trend.

4. Conclusion and Recommendations for Solutions to Develop Economic Zones and Industrial Parks in Thanh Hoa Province towards Green growth

In order to develop EZ and IPs in Thanh Hoa towards Green growth, the provincial government, together with the Management Board of Nghi Son EZ and IPs, need to focus on directing to thoroughly understand each agency, each civil servant, and each enterprise from within the State management apparatus to businesses about the importance of Green growth. There should be adequate investment priorities for EZ and IPs and linking the development strategy of EZ and IPs with the province's socio-economic development strategy. At the same time, local authorities can consider solutions to develop EZ and IPs as follows:

(1) Develop EZ and IPs in the direction of harmoniously combining both width and depthdevelopment. Reasonable development of industries; prioritize the attraction of a number of new and high-tech industries to create new growth engines. Among economic zones and industrial parks, priority is given to attracting supporting industries, gradually forming and developing a number of clusters linking key industries.

(2) Localities could choose 1-2 industrial parks to develop towards eco-industrial parks and high-tech zones. The planning/re-planning of industrial zones in this direction will contribute to improving the economic efficiency of enterprises in industrial parks through the application of clean production measures, efficient use of resources and construction of industrial symbiosis. Putting into operation the Hi-tech Agricultural Park, Information Technology Center; Research zone, Technology Incubation, High-tech enterprise incubation.

(3) The development of policies to encourage enterprises in EZ and IPs to produce and process products that meet the standards of green growth is also the core for the zones to develop in the direction of green growth.Creating motivation (by institutions, policies) to strongly promote the development of zones that are key growth engines for the development of high-tech, environmentally friendly projects. Focusing on selectively attracting new investment projects in textiles, prioritizing the development of information technology, telecommunications, electronics, digital products, manufacturing robots, integrated equipment for automatic operation, remote control, pharmaceutical, plastic, chemical, biological product..

(4) The investment in EZ and IPs needs to be prioritized for investment in the rapid development of socio-economic infrastructure, especially the infrastructure of synchronous and modern industrial zones, connecting the poles growth to reduce costs for businesses, save energy, reduce environmental pollution. Invest in completing the centralized wastewater collection and treatment system in economic zones and industrial parks. Having appropriate mechanisms and policies to encourage all economic sectors to participate in investment and construction of pollution treatment and environmental protection projects and works.

References

[1]   | Thanh Hoa Provincial Party Committee (2018), Preliminary Report on the implementation of Decision No. 288-QD-/TU dated May 27, 2016 of the Provincial Party Committee on the development program of Nghi Son EZ and industrial zones period 2016-2020.
[2]   | UNDESA (UN Department of Economic and Social Affairs) (2012), A guidebook to the Green Economy Issue 1: Green Economy, Green Growth, and Low-Carbon Development – History Definitions and a Guide to Recent Publications, Division for Sustainable Developmentemtn, UNDESA.

[3]  
World Bank (2010). Innovation Policy: A Guide for Developing Countries. Washington, DC: World Bank Institute; Porter, M. (1990). The Competitive Advantage of Nations. New York: Free Press; Schmitz, H. (1995). “Small Shoemakers and Fordist Giants: Tale of a Supercluster.” World Development 23 (1): 9-28.

[4]   | UNIDO (2011b), UNIDO Green Industry Policies for supporting Green Industry, www.unido.org.
[5]   | UNIDO (United Nations Industrial Development Organization (2011a), UNIDO Green Industry Initative for Sustainable Industrial Development, www.unido.org.
[6]   | Hart, S.L., & Ahuja, G. (1996), “Does it Pay to be Green? An Emperical Examination of the Relationship between Emission Reduction and Firm Performance”, Business Strategy and the Environment, 5(1), 30-37.
[7]   | Global green Growth Institute (2015), “Korea's green growth experience” Freedom Man - Shutterstock, Inc.
[8]   | Vietnamese Government (2012), Vietnam's Green Growth Strategy.
[9]   | Vietnamese Government (2014), Decision No. 403/QD-TTg on the National Green Growth Action Plan 2014-2020.
[10]   | Thanh Hoa Provincial People's Committee (2017), Decision No. 177/QD-UBND dated January 16, 2017 on approving the adjustment of the master plan for industrial and commercial development of Thanh Hoa province up to 2020, orientation to year 2030.
[11]   | Management Board of Nghi Son Economic Zone and Industrial Zones in Thanh Hoa province (2011-2020), Final report on the performance of annual tasks, directions and tasks for the next year.
[12]   | Thanh Hoa Provincial Party Committee (2021), Development Program of Nghi Son Economic Zone and Industrial Parks of Thanh Hoa Province in the period of 2021-2025.
[13]   | Small and Medium Enterprises Development Fund (SMEDF)in Vietnam (2019), Small and Medium Enterprises Manual: Green Growth Criteria for Enterprises.
[14]   | Thanh Hoa Provincial People's Committee (2020), Socio-economic implementation situation in 2020, socio-economic development plan in 2021 Thanh Hoa province.
[15]   | Thanh Hoa Provincial People's Committee (2016). Decision No. 359/QD-UBND dated January 28, 2016 of the Provincial People's Committee on the Action Plan to implement the “Green Growth Strategy of Thanh Hoa Province to 2020, orientation to 2030”.