Hanoi (VNS/VNA) - There is a rising wave ofconverting rubber plantations into industrial land as developers eye spots forindustrial zones to capture opportunities from global value chains.

Converting plantations into industrial land could be theanswer for rubber companies facing falling rubber prices.

With large areas in Binh Duong, Dong Nai and Tay Ninh, rubber plantations had highpotential for merger and acquisition (M&A) deals to turn them intoindustrial zones.

In Tan Uyen district, Binh Duong province, about 345ha ofPhuoc Hoa Rubber Company got the Prime Minister’sapproval to be converted to develop the Nam Tan Uyen Industrial Zone’s expansion project.

At the annual shareholders’ meeting in 2019, Phuoc Hoa also said that it would transfer691ha to Vietnam Singapore Industrial Park Company Ltd. (VSIP) to developVSIP No 3.

Dong Nai Rubber Corporation recently asked theprovincial People’s Committee’s permission for the conversion of land usepurpose of 18,000 out of 37,000ha of rubber land the company was currentlymanaging.

Under the company’s proposal, 5,000ha of land would beused to develop industrial zones and clusters in Thong Nhat, Long Khanh, Cam My and Long Thanh districts. The rest would be used fordeveloping high-tech agriculture and urban areas.

Mirae Asset Securities Vietnam in a recent report estimatedthat more than 7,000ha of rubber land was planned to be converted intoindustrial land.

Investing in industrial zone development had become one ofthe major business lines of Vietnam Rubber Group (VRG) which manages around400,000ha of rubber land. As of September 2019, VRG invested in 12companies which operated 16 industrial zones with a total area of more than6,566ha.  

According to BIDV Securities Company, the industrial propertymarket would see significant growth from next year with the momentum gainedfrom free trade agreements (FTAs), especially the European Union – Vietnam FTA(EVFTA) – the trade deal with commitments about improving institutions andbusiness climate which would make Vietnam more attractive to investors.

In addition, the COVID-19 pandemic was accelerating thetransformation of global value chains, during which Vietnam could emerge as acentre for investment inflow.

Of note, Vietnam was accelerating disbursement of publicinvestment with a focus on infrastructure, which would benefit industrial parksin the long term.

A report by property service firm JLL Vietnam showed thatdemand for industrial land remained high in the first months of this yeardespite the impacts of the COVID-19 pandemic.

Average leasing prices were up by 6.5 percent against thesame period last year to 99 USD per sq.m in the northern region and by 12.2 percent in the southernregion to 101 USD persq.m.

Experts, however, said that it was necessary to have a planfor converting rubber land into industrial parks to improve land use efficiency.

The Ministry of Planning and Investment’s statistics showedthat there were 335 industrial parks with a total area of 96,500ha inVietnam as of November 2019. Of them, 256 were in operation with an occupancyrate of 75 percent./.