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Becamex My Phuoc Industrial Park (MPIP):  Good and Getting Better

 

(left) Becamex's new development of My Phuoc Industrial Park or MPIP after their early success on Vietnam Singapore industrial Park (right)

The Binh Duong Trading – Investment and Development Corporation (Becamex IDC Corporation) is a Vietnamese joint stock company belonging to Binh Duong province.  The company owns and manages numerous investments on behalf of the province.  Becamex is a joint owner with a consortium from Singapore represented by SembCorp Industries of the highly successful Vietnam Singapore Industrial Park (VSIP) which is currently fully booked in its first location and is now well into sales in its second park – VSIP II which is about a 20 minute drive further from Ho Chi Minh City.   The fact that a provincially owned company is a leader in development shouldn’t be a surprise.  Binh Duong regularly tops the list in terms of development in Vietnam and in 2006 Binh Duong led the Provincial Competitive Index (PCI) narrowly topping Danang, which had risen strongly over the last year.   GDP growth for the province as a whole toped 15% in 2005 and this is nearly twice Vietnam’s average.

In addition to being involved in making VSIP such a success, Becamex several years after starting VSIP with Singapore commenced development of the My Phuoc Industrial Park (MPIP).  MPIP is located 42 Kms. to the North of Ho Chi Minh City and of the current Tan Son Nhat airport and a similar distance to major port facilities.  The park started with a first phase of 400 Hectares and now is in its third stage of development with a total area of over 3,400 Hectares, making it one of Vietnam’s largest industrial development zones.  By comparison VSIP started with 300 Hectares in Stages 1 and 2 and has just added another 350 hectares in its new park (a little more than one-fifth the size of MPIP). 

 

(Picture left) Map showing location of My Phuoc IP in relations to Binh Duong province, Dong Nai province and Ho Chi Minh City

Recently I toured the park with Vice General Director Pham Ngoc Thuan and Advisory & Marketing Director Vo Son Dien and was quite frankly impressed with the professionalism of management of the industrial park, progress in implementing park plans described to me on my two previous visits and by Becamex and the industrial parks unique integrated views of economic development and community responsibility.

Infrastructure in MPIP I and 2 has largely been completed and tenants told me that water, electric, sewage and other basic services are reliable and well supported.  The park has an overall electrical supply of 1,400 MVA and water at WHO standard even for large industrial applications.  Additionally Binh Duong is one of the 3 international telecommunication gateways for Vietnam and thus fiber-optic and leased lines are readily available at the site.  To date over 130 investors from 17 countries worldwide have invested in MPIP with a total investment of over USD 1.2 Billion and job creation for more than 20,000 workers.  Major companies already resident in the park include Yazaki EDS, Kondo Textile, VJTE, Toyo Seikan and Denshi Marua from Japan.  Sigla, D&DC Vaise, GEM Manufacturing, andT&L Metal Sheet from the U.S.  Tatung Electronic, Diamond Group, Kaiser Furniture (Vietnam) Co., Ltd. and Nova from Taiwan and Kumho Tyre Corporation, Orion Confectionery, Panko Vina and Dongbu Hannong from Korea.

(Picture left) Land preparation at the My Phuoc Industrial Park and (right) Shipping Containers Storage area inside the Industrial Park

 

(Picture left and right) Some of the factories in My Phuoc Industrial Park

I toured the 10 hectare or 40 acre site taken by Kaiser Furniture (Vietnam) Co., Ltd and spoke with the company’s Vice General Manager Andrew Chang from Taiwan.  This factory complex, which is as big as a small town and requires a car or at least a golf cart to get around has over 20 factory buildings and builds furniture for Wickes Furniture in the U.S.  The complex is currently still in the start-up phase and not all buildings are in full operation but already the facility exports 30 40-foot containers a day and will reach 50 containers a day in terms of exports by later this year.  The manager told me that the owner who is of Taiwanese extraction but now is a U.S. citizen had owned and operated a similar large facility in South China that also exported to Wickes.  About 18 months ago, Wickes determined that too much of their production was coming out of China and that for safer management considerations some of their production needed to move to another country with similar low costs, high quality levels and political and economic stability.  Vietnam was chosen to meet these requirements.  Interestingly in talking with clients, many companies are reviewing such spreading risk considerations and Vietnam is often the recipient of a portion of the former China business.

 

(Picture left) the author, Mr. Christopher Runckel, President of Runckel & Associates, is seen at the entrance of Kaiser Furniture (Vietnam) Co., Ltd and (right) their storage area

As in many well-run industrial parks in Vietnam government Customs clearance for export and receipt can be accomplished at the park and at the tenants factory.  One client who joined me on this visit and who is overseeing a factory in South China said this was a major improvement over the way customs is handled in China.  According to him, transfer of goods across province lines and minor corruption with Customs clearance in China remains a recurring headache.    Vice General Director Pham told me that he and his team were always reviewing their work and making improvements.  “MPIP II was better that MPIP Stage I and the new MPIP III which is currently having the infrastructure completed and will contain a golf course and many new amenities will be even better than either of the first two stages”, according to the Vice General Director.

 

(Picture left) Expatriate Housing units and (right) Staff Training Center inside My Phuoc IP

Sustainability is a “buzz word” much used and abused in both the west and the east and a term often used to destroy the name of Asian developers who are perceived as not paying sufficient attention to pollution, land use and other concerns.  Becamex and the My Phuoc Industrial Park (MPIP) don’t see themselves as building an industrial park, they see themselves developing an industrial city/complex hosting not only industrial activities but also supporting commercial, residential, educational and other supporting developments. 

Vice Director Pham said that his company had toured Vietnam, S.E. Asia, China and elsewhere in Asia prior to starting MPIP to learn “best practices” that could be implemented in Binh Duong province plus also to learn from mistakes in planning and execution in other countries and in Vietnam to ensure that his group had a more holistic view of development that brought the benefits of development not only to company owners but to workers, professional staff, their families, neighboring supporting vendors like restaurants, stores, banks, etc.  He said his company was and is interested in profits but also felt they had a requirement to both give back to the community they served and to ensure that development met societies interest in good schools, good medical care, building of community facilities like fire, police, schools, libraries and other institutions as to do otherwise would be unsustainable.  He continued that “unless workers had reasonable and economical places to live, to school their children, to take them for medical care if they fell ill and to enjoy open space and leisure activities if they were off from work, the workers would only come work for several years but then would move on to areas that better supported these needs.”  Vice Director Pham pointed out that the Eastern Coast of China was already seeing the unsustainable nature of having workers live crammed in dormitories with no neighboring schools or other support facilities and the result was that Guangdong and some other regions were already experiencing labor shortages and rapid worker turnover as a result.  He said MPIP was looking to the long-term and believed that rational investments both by Becamex and other investors drawn to MPIP by Becamex in worker housing, schools, shops and other facilities were good long-term investments both for his park and for his tenants as they guaranteed better worker satisfaction and encouraged increased worker retention.

MPIP management and their philosophy of community interaction and the need for looking to the future by trying to more fully meet worker requirements outside of work today impressed me.  I was further impressed by the willingness of management to clearly list out land pricing and fees and to note all fees due now and in the future.  Leasing land for a new factory in Vietnam can be very, very confusing and there are many hidden and oftentimes not hidden but misunderstood fees and additional costs at many parks.  MPIP has I believe one of the clearer ways of pricing land and services and they are to be applauded for taking such a consumer oriented approach.  It is not what you would expect from what was a state-owned company but Becamex and My Phuoc Industrial Park defy easy classification and I encourage investors to take a look at both the company and the park – no one park or one company meets every projects needs but there is a lot of innovation going on here

About the Author:  

Christopher W. Runckel, a former senior US diplomat who served in many counties in Asia, is a graduate of the University of Oregon and Lewis and Clark Law School. He served as Deputy General Counsel of President Gerald Ford’s Presidential Clemency Board. Mr. Runckel is the principal and founder of Runckel & Associates, a Portland, Oregon based consulting company that assists businesses expand business opportunities in Asia. (www.business-in-asia.com)

Until April of 1999, Mr. Runckel was Minister-Counselor of the US Embassy in Beijing, China. Mr. Runckel lived and worked in Thailand for over six years. He was the first permanently assigned U.S. diplomat to return to Vietnam after the Vietnam War. In 1997, he was awarded the U.S. Department of States highest award for service, the Distinguished Honor Award, for his contribution to improving U.S.-Vietnam relations. Mr. Runckel is one of only two non-Ambassadors to receive this award in the 200-year history of the U.S. diplomatic service.

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