Day 8: The Convenience and Companies of VSIP

Today, we spent our day inside the Vietnam Singapore Industrial Park (VSIP). The industrial park is compromised of a variety of commercial and residential sites. Companies can rent prepared industrial land for up to 50 years or ready-built factories for shorter periods of time. The industrial park also offers residences and schools for employees. The park was initially created in 1996 as a joint venture between the governments of Vietnam and Singapore. Vietnam provided cheap land, inexpensive labor, and tax incentives while Singapore provided client networking. This deal is not unique however. Many industrial parks in Vietnam are joint ventures between nations. One of VSIP’s bigger competitors is an industrial park that is a joint venture of Vietnam and Thailand.

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This is a map of the first VSIP.

Industrial parks like VSIP are attractive and beneficial for manufacturing companies due to their one-site customs, government connections, and tax incentives. Vietnam in general is attractive due to its central location in Asia and cheap labor, but industrial parks like VSIP are especially attractive. VSIP has effective water drainage and sewage systems as well as its own power plant. For these reasons, companies like II-VI have built production sites in VSIP.

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After a brief bus tour of VSIP and lunch at the on-site mall, we headed to II-VI for our second site visit of the day. II-VI is a manufacturing company that produces photonics, performance products, and lasers. They are a vertically integrated company that produces the materials as well as components and full systems. In order to protect intellectual property, all research and development as well as high-end military work is done in the USA. The company has expanded overseas to fill other demands. The factories in Vietnam mostly focus on low cost, high volume products. Being located in Vietnam is convenient due to the low labor cost and tax incentives. However, II-VI has struggled in the past with workforce turnover. In 2005, half the workforce did not return from the Tet holiday.  In order to prevent this from happening again, II-VI pays above minimum wage and offers more benefits to their employees. With the training that the company puts into their employees, they are invested in keep their turnover rate low.

After a full day at VSIP, we ended the night with a trip to the Bitexco Tower Skydeck to see the nighttime view, and then had Vietnamese beef steak for dinner.

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