Quang Ngai’s Dung Quat economic zone attracts investment flows

 The Dung Quat Economic Zone (DEZ) with the 3 billion-USD Dung Quat Refinery as its heart can be said to be the driving force of economic development in the central province of Quang Ngai. 

The DEZ has also attracted several large-scale projects, thus becoming one of the central region’s most attractive investment destinations, contributing to economic development in the locality and the region at large. 

The first 10 months of this year saw 10 projects granted licences to operate in the Zone with a combined capital of over 1 trillion VND (47 million USD), a ccording to Le Minh Huan, Chairman of the provincial People’s Committee. Three of these projects are invested by foreign investors.

Three other projects worth over 4,000 trillion VND (188 million USD) are expected to be granted licences in the remaining months of the year, Huan added. 

After 18 years of development, the zone has attracted 120 projects with a total registered capital of 8.5 billion USD and disbursed capital worth 4.85 billion USD. 

In 2013-2014, the Zone’s management board enhanced its investment promotion efforts, both domestically and abroad, by participating in workshops to introduce the park to leaders in the support industries and agricultural sector in Japan and the Republic of Korea (RoK). 

At the same time, many delegations from the Japan External Trade Organisation (JETRO), and businesses from Japan, the RoK, the US and Singapore, along with other international and domestic firms, undertook fact-finding tours to the province to seek investment opportunities in the DEZ as well as in other local industrial parks. 

Yasuzumi Hirotaka, CEO of JETRO said following his tour that Quang Ngai is one of the most popular destinations for Japanese firms to invest in, and his agency would serve as a bridge to introduce the locality’s potential to more Japanese investors. 

There have been positive signals in attracting investment into the DEZ in recent times, as a number of international businesses have affirmed their intention to deploy large-scale projects in the zone in many fields, especially thermo-electric power generation, gas-power, and wood-pulp. 

Japan’s Sojitz Group is planning to team up with India’s JK Group to build a wood-pulp plant in the DEZ with a capacity of 150,000 tonnes per year.

At the same time, preparations are under way for two key projects worth approximately 4 billion USD, which are the Dung Quat Thermal Power Plant (2.2 billion USD) and the expansion of the Dung Quat Oil Refinery (1.8-2 billion USD).

Deputy Prime Minister Hoang Trung Hai has assigned the Vietnam Oil and Gas Group (PetroVietnam) to complete studies on upgrading and expanding the Dung Quat Oil Refinery, to be submitted to the Ministry of Industry and Trade before November 15 for verification. 

Meanwhile, the Ministry of Industry and Trade was assigned to work with relevant ministries and sectors, as well as the Quang Ngai provincial People’s Committee to verify the project, and report to the Prime Minister in November. 

PetroVietnam said the plant’s production capacity would be increased to 9-10 million tonnes/year from the current 6.5 million tonnes. The expansion will start in 2017 and it is expected to be fulfilled after 60-78 months of construction. 

Meanwhile, the Dung Quat thermal power plant will be financed by Sembcorp Corporation of Singapore. The Prime Minister has agreed to include the plant in the national power master plan VII. The 1,200MW plant will be built in the form of Build-Operate-Transfer (BOT) on 134ha of land in Binh Dong commune, Binh Son district, with its construction scheduled to begin in 2016. 

Its first turbine will be operated commercially from September 2020 onwards, while the entire plant will become fully operational in March 2021, generating 7 billion kWh of electricity every year.

The DEZ’s management board is building resettlement areas for some 2,160 households, the largest number of households to be relocated in the zone so far

The VSIP Quang Ngai Industrial-Urban-Service Complex, invested by the Vietnam-Singapore Joint Venture Co. Ltd, is set to become a new magnet for light industry and service projects to the DEZ in the near future.

By the beginning of November, the complex attracted nine FDI projects and a domestic project with a total funding of 164.3 million USD.

Three projects are expected to be completed or become operational by the end of this year, and three others are due for completion in 2015. These six projects are set to employ 8,000 people.

The DEZ is working to expand its southern section with the formation of the Dung Quat Heavy Industrial Zone 2 and the Dung Quat deep-water Seaport 2.

According to a plan publicised in September 2013, the Zone 2 will cover nearly 2,820ha, bordering the Dung Quat Seaport 2 in the northeast, the Van Tuong new urban area in the northwest, Sa Ky city in the southeast, and Binh Tan and Tinh Hoa communes in the southwest.

It will focus on oil refinery, chemical industry, manufacturing, shipbuilding, steel, thermal electricity, and support industries, to be served by the deep seaport.

Meanwhile, under the Ministry of Transport’s detailed plan for 2030, the Dung Quat Seaport 2 will comprise 1,850ha of land and water. The port will be able to cater for ships with tonnages of over 300,000 tonnes, and handle 37 million tonnes of cargo per year by 2025 and 100 million tonnes by 2030.

Additionally, Quang Ngai province is also working hard to perfect its traffic infrastructure, such as the second phase of Vo Van Kiet road, the routes connecting Tri Binh and Dung Quat port, and Dung Quat 1 and Dung Quat 2 zones. 

At the end of November 2013, the provincial People’s Committee issued a decision stipulating policies to support investments in certain activities. The support includes the construction of resettlement areas, technical infrastructure and labour training for projects on social housing, education, vocational training, health, culture, sport the environment and tourism, investment projects in industrial parks and the DEZ as well as projects in the province’s list of priority investment. 

Maximum support for a project is 20 billion VND. Additionally, investors will receive financial assistance in order to hold three-to-six-month training courses for their new labourers.

Currently, local authorities are offering a range of tax incentives according to the Government’s regulations for investors, including a preferential corporate income tax rate of 10 percent for the first 15 years since the start of production; a four-year tax exemption after earning taxable income; and a 50 percent tax cut for the next nine years.

Large-scale projects must be approved by the Prime Minister in order to enjoy a preferential tax rate of 10 percent over the course of 30 years; tax exemptions for fixed asset imports, and tax exemptions for imported production materials over 5 years since the start of production; and a 50 percent tax reduction for personal income tax. 

Local authorities also adopted policies to support land clearance compensation and labour training in a bid to encourage investments in the Dung Quat economic zone.

This year, the DEZ generated nearly 130 trillion VND (6.19 billion USD) in industrial production and commercial services value, despite the Dung Quat refinery having to halt operations for two months of maintenance. 

The provincial industrial production value was estimated at 20.6 trillion VND, exceeding the annual target by 6.7 percent. Export turnover stood at 650 million USD, up by 27.8 percent, and imports stood at 760 million USD, down by 34 percent year-on-year.

The province contributed nearly 28.1 trillion VND to the State budget, with 26 trillion VND generated by the DEZ. 

The provincial economy is forecast to continue to thrive in 2015 due to the stable operations of the Dung Quat oil refinery plant and the commencement of investment projects in the VSIP. 

Gross domestic product (GDP) per capita is expected to reach 2,546 USD per year, while the production value of industry and construction would rise by 11-12 percent, services by 12-13 percent, and agriculture-forestry-fishery by 2-3 percent