Both industrial parks and industrial clusters allow for the establishment of manufacturing facilities; however, there are key differences that investors need to understand in order to choose the most suitable location for their factory. This decision is crucial for facilitating smooth production and business operations, as well as optimize investment cost.

Overview of Industrial Parks and Industrial Clusters

What is an Industrial Park (IP)?

An industrial park is a specialized area designed for the construction of factories and workshops, with planned and well-invested infrastructure. Industrial parks are not limited by size or area and can reach thousands of hectares, making them a good fit for large enterprises or those looking to develop supply chains, optimizing logistics and circular economy practices.

What is an Industrial Cluster (IC)?

An industrial cluster is also a planned area for the construction of factories and workshops, equipped with basic infrastructure. Unlike industrial parks, industrial clusters are limited in size, and thus, are typically more suitable for medium and small-sized enterprises.

Key Differences Between Industrial Parks and Industrial Clusters

Differences in Scale

Both industrial parks and industrial clusters are designated areas for factory construction, yet there are some key differences that investors need to understand.

Industrial Park	Industrial Cluster
There is no specific regulation regarding the minimum area for industrial parks. They are not limited in terms of area. They can be expanded provided they meet the approved developmental planning requirements.	The minimum area is 10 hectares (in mountainous areas or craft villages, it is 5 hectares). The maximum area is 75 hectares. Due to the area limitation, the number of enterprises within an industrial cluster is also restricted.

Due to not being limited in area, several industrial parks in Vietnam have been developed and expanded to thousands of hectares. For example, the Deep C Quang Ninh Industrial Park in Hai Phong covers 3,400 hectares, and Nam Dinh Vu Industrial Park in Hai Phong covers 1,329 hectares, attracting FDI from key markets such as Japan, South Korea, and Taiwan. Additionally, the Yen Phong Industrial Park in Bac Ninh, with an area of 1,200 hectares, has been chosen by Samsung as a site for manufacturing components and assembling mobile devices.

See more: FDI in Vietnam increased by 13.4% in Q1 2024, focused on the processing and manufacturing sectors.

Differences in infrastructure conditions

Most industrial parks in Vietnam are currently focused on investing in synchronized and modern infrastructure to meet all the production needs of businesses. Meanwhile, industrial clusters, a newer form, are also paying attention to infrastructure increasingly.

Industrial Park

Industrial Cluster

Transport System: Conveniently located near seaports, border gates, and highways, facilitating the logistics.
Electricity and Drainage Systems: Fully provided, ensuring they meet the production needs of the factories.
Wastewater Treatment Requirements: Strictly enforced, with some industrial parks equipped with centralized wastewater treatment systems.

Transport System: Proximity to major provincial roads and national highways, facilitating logistics. Additionally, industrial clusters are often located near populated areas, making it easier to recruit workers.
Electricity and Water Supply Systems: Meet the operational needs of businesses.
Wastewater Management: Some small clusters do not have their own wastewater systems, requiring enterprises to design and build their own wastewater treatment system or collaborate with external waste water treatment services.

Differences in Specific Investment Sectors

Both industrial parks (IPs) and industrial clusters (ICs) are designated areas for establishing manufacturing facilities. However, there are differences in the types of businesses and specific regulations for certain investors:

Industrial Park	Industrial Cluster
Attract a diverse array of businesses in terms of size and types of manufacturing sectors. Export processing enterprises are permitted to operate within the industrial park.	Generally attract medium and small-sized enterprises. Export processing enterprises are not allowed to operate within industrial clusters.

Differences in Investment Costs

Industrial Park	Industrial Cluster
The synchronized and modern infrastructure, making it suitable for large enterprises, especially those in high-tech industries.	Land costs in ICs are generally lower than in IPs in the same area, making them more suitable for small businesses or new investors with limited budgets.

Differences in Investment Procedures

Industrial Park	Industrial Cluster
The management board of the IP provides support to investors throughout the investment procedure process.	The management board of the industrial cluster also supports investors, but the investors might still need to carry out various investment procedures at the district-level People’s Committee or other locally authorized agencies.

Thus, depending on the scale and production needs of each business, investors need to carefully research and select a factory location that is appropriate, ensuring that the plant operates smoothly and meets future expansion requirements.

See more: List Of Industrial Zones In Vietnam – 2023 – Delco Construction (delco-construction.com)

See more: Investment Consultancy and Factory Construction Project Managing