Sumitomo pouring $176 million into industrial park expansion in Vietnam
The Tokyo-based multifaceted company seeks to expand two of its three industrial parks in the country, to cater to the industrial growth and expansion of many FDI companies in the country.
Sumitomo Corporation last week announced its agreement with Vietnam’s Hung Yen province on the third phase development of the Thang Long Industrial Park II (TLIPII) in Hung Yen. Under the deal, the industrial park will be enlarged by another 180.5 hectares, making the new site in combination with the current ones one of the largest Japanese industrial parks in Vietnam.
The project will cost over JPY14 billion (approximately $130 million) in total and construction work will start in 2021 and sales in 2022.
Sumitomo will accordingly develop the land adjacent to TLIP II in the southeast. TLIP II is located about 30 kilometres east of Hanoi. Phase 1 of the industrial park covers an area of 220 hectares while Phase 2 has been completed on the 125.6-hectare site. The total land area of the TLIPII will be 526.1 hectares upon the completion of Phase 3.
Apart from the TLIP II, Sumitomo is said to be injecting JPY5 billion ($46.3 million) into its Thang Long Industrial Park III (TLIP III) in Vinh Phuc province, in a bid to upsize the total area to 213 hectares. The construction is expected to take place in the first half of 2020.
TLIP III was initiated in 2015 as the third industrial park of Sumitomo Corporation in Vietnam. Under the original plan, up to 213 hectares are scheduled to be developed, with project costs expected to total more than JPY10 billion ($92.6 million). Its first phase covering an area of 94.5 hectares was completed and open for business in late 2018.
According to Sumitomo, the Trans-Pacific Partnership Agreement entering into force for Vietnam in January 2019 and the EU-Vietnam Free Trade Agreement signed in June are expected to lead to further industrial growth.
In addition, thanks to industrial diversification and vigorous domestic demand associated with the population increase, further entry of foreign companies, primarily manufacturers, as well as expansion of foreign companies that already have operations in the country, are anticipated in Vietnam.
Sumitomo Corporation has been developing, selling and operating special economic zones and industrial parks in Indonesia, the Philippines, Vietnam, Myanmar, India and Bangladesh.
Sumitomo Corporation’s industrial park business is on display at its grandest scale in Vietnam, where it has developed a new industrial park every ten years or so: Thang Long Industrial Park in 1997, TLIP II in 2006, and TLIP III in 2015.
As the number of Japanese manufacturers moving into Vietnam each year has accelerated over the past two decades, these industrial parks have served as important foundations for their production activities.