Integrated industrial townships: A development model to maximise benefits for investors, businesses and residents

On the morning of 7 May 2021, enCity hosted a webinar entitled, “Integrated Industrial Townships: Challenges & Innovation” where we shared key insights and expertise in the planning, design and implementation of integrated industrial townships, which is a development model currently favoured by investors to maximise land value and optimise production processes. The event was moderated by enCity’s CEO, Mr. Dzung Do Nguyen, and the panel of speakers featured Mr. Huynh Quang Hai (VSIP JSC Group Executive Director and CEO, Co-Chairman of VSIP North and Central; Vice Chairman of BW University and Industrial Park, Becamex IDC Corp; President of VNTT Joint Stock Company JTC Board Member), Prof. Heng Chye Kiang (enCity’s Senior Advisor and JTC board member, Singapore’s leading industrial park developer) and Mr. Pablo Acebillo (enCity’s Senior Associate and Manager of Master Planning and Design).

Starting from the trends that have led to this shift in the manufacturing industry, the speakers highlighted the benefits of the integrated industrial township model and presented planning strategies to mitigate the challenges associated with its implementation. The webinar had around 100 attendees, including investors who actively participated during the open forum and brought up very relevant questions about its application.

Presentation: Maximising the benefits & mitigating the challenges of an integrated industrial township

Mr. Pablo Acebillo (in the middle) presented enCity’s insights on integrated industrial townships

The rise of Industry 4.0 has made a big change to the way manufacturers operate. New technologies, such as 3D printing, and advancement in R&D (research and development) capacities have enabled a new level of value chain integration where all activities encompassing the production process can happen at the same location. With numerous international investments and strong government support, Vietnam is currently well-positioned to expand its industrial ecosystem towards cleaner and more high-tech manufacturing developments. Demand for industrial land both in the north and south regions of the country is increasing, with the share of spending on technical infrastructure accounting for 5.8% of GDP per year.

Given the above development trends and conditions, integrated industrial townships are emerging all over the world, especially in Vietnam. Residential areas are being developed alongside industrial parks to provide not just housing for workers and talents, but a holistic lifestyle of live-work-play. It is important that investors conceive an efficient planning strategy to optimise this model while minimising risks. enCity’s planning approach aims to maximise three major benefits to stakeholders: (1) increased land value for investors, (2) concentration of manufacturing value chains for businesses, and (3) high-quality living communities for workers.

For investors, higher land value can be achieved through the strategic placement of township components in relation to industrial activities. This can be realized through three spatial models:

1. Industry surrounded by township: The township exploits the value generated by industrial land. This approach is quite common in provinces that have just begun to industrialise, where industrial components become the main value generator; hence, interface between industry and township is maximised.

2. Industry adjacent to township (buffered by non-residential activity): Popular in areas with established industrial developments (such as in Singapore or in Binh Duong Province, Vietnam), industrial zones are located close to communities but are separated by office, research or educational activities.

3. Industry integrated with township: Industrial programs are enhanced by non-industrial uses. This typology is common in more developed countries where the value is generated by the co-location of knowledge-intensive activities together with manufacturing. The co-location of different components of the production process optimises business efficiency and close proximity to urban and research activities increases the value of industrial land.

However, the implementation of integrated industrial townships also comes with its set of challenges – namely  urban and industrial traffic conflicts, environmental risks, and difficulty to attract residents in the early stages of development. To address these issues, enCity offers three solutions accordingly.

– Regarding traffic solutions: Two strategies can be utilised to minimise traffic conflicts between industry and townships. The first one focuses on consolidation. Taking enCity’s plan for an industrial park in Singapore as an example, logistics operations were amalgamated in one central hub above an expressway.  This not only allows greater efficiency for the handling of goods and for land optimisation, but also focuses industrial traffic in the expressway to avoid trucks passing through residential areas. The second strategy promotes separation of traffic modes to guarantee safety. This is used by enCity in an innovation park development in Vietnam, where industrial and urban traffic are completely segregated through the design of multi-way boulevards to serve different vehicular flows.

– Regarding environmental solutions: Pollutive and undesired activities can be separated from higher-value areas through innovative land use solutions and multi-functional green belts. Residential activities can be buffered from industries by uses such as commercial, R&D and open space, which also contributes to the living environment of communities.

– Regarding thriving communities: The first challenge that investors often face is how to increase the vitality of the residential component in integrated industrial townships, since most of them are far from existing urban areas. To deal with this issue, enCity’s goal is two-fold: to introduce density into the development, and to bring in amenities and focal points. Density can be achieved by planning for different housing products, which can create the critical mass able to bring vibrancy into a place. Attractive facilities, such as sports hubs, community centres and central parks, act as destinations and serve both communities and visitors.

Binh Duong Science, Technology and Industrial Park (STIP) project by enCity

With three approaches to optimise benefits and three strategies to minimise risks, enCity’s planning experts concluded with a summary of the six innovative solutions needed to build livable townships while providing jobs and economic development platforms for industries. These are:

(To optimise benefits):

  • Placement of township vis-à-vis industrial activities to enhance land value for the developer
  • Horizontal and vertical integration of industrial and non-industrial components to concentrate manufacturing value chain in one place
  • Provide amenities-rich residential community for workers near the workplace

(To minimise challenges):

  • Separating industrial activities from the residential community through multi-functional buffers
  • Creative zoning and multi-function green buffers
  • Varied and strategically-located housing options, with attractive recreational amenities

The “Father” of integrated industrial township model in Vietnam: “20 years ago, it was difficult for anyone to imagine having a lively township inside an industrial park like VSIP.

Mr. Huynh Quang Hai, VSIP JSC Group Executive Director and CEO, Co-Chairman of VSIP North and Central, spoke about his experience developing and managing industrial parks all over the country.  “I have 26 years of experience in building industrial parks in Vietnam since I joined VSIP in October 1995. If you come to VSIP’s industrial parks in Binh Duong, Bac Ninh, Hai Phong, Hai Duong, Nghe An or Quang Ngai, you will find that the VSIP industrial park model is totally different from most of the other industrial zones in Vietnam. Particularly, it has more greenery and we have dedicated pathways for workers.VSIP recognized the demand from investors – they needed houses for their experts, schools for their children, restaurants, amenities, banking services… all located within the industrial park complex. ”

Mr. Huynh Quang Hai shared his experience at VSIP at the webinar

In Binh Duong, VSIP developed the model for VSIP 1, an industrial zone that has not only manufacturing factories, but also apartments (such as Canary Cocoland), large commercial centres (such as AEON Mall Canary), banks (like BIDV, Vietcombank, Dong A Bank) and even Binh Duong’s first international 4-star hotel, which is about to open in May 2021. According to Mr. Hai, more than 20 years ago, VSIP planners would not have imagined that there would be a bustling urban development inside their industrial park.

When VSIP started the project in Bac Ninh, they drew lessons from their experience in Binh Duong and applied the same model of integrated industrial township to break down a 700-hectare development into 200 hectares of urban area and 500 hectares of industrial zone. “As of today, the industrial park is fully occupied, and half of the township is already inhabited. VSIP has won many international awards in Vietnam such as ‘Best Urban Developer’ and ‘Green Urban Developer’, specifically for the development of Belhomes VSIP Tu Son, Bac Ninh. Similarly, we implemented the concept in VSIP Hai Phong Service – Industrial Township, the most expensive and beautiful industrial park in Hai Phong –  which has an area total of 1600 hectares. Only 600 hectares is designated for the industrial component, while the rest (nearly 1000 hectares) is for the town, and it is already 70% occupied.”

Lessons learned about developing intergrated industrial township in the world

From VSIP’s experience in planning integrated industrial townships, Mr. Huynh Quang Hai relays that the most important element is not the plan, but how to develop it into a reality and minimise foreseeable conflicts. VSIP has chosen to partner with enCity because of the accumulated international experience of Professor Heng Chye Kiang and Mr. Nguyen Do Dzung, who both have a deep understanding of the locality and the needs of manufacturers (VSIP has more than 1000 factories from many manufacturers around the world) in the development of industrial parks.

Professor Heng Chye Kiang (Senior Advisor of enCity) was deeply involved in the planning of Suzhou Industrial Park – one of the most successful industrial projects in China

According to Professor Heng and Mr. Dzung, planners should be flexible – they need to anticipate future economic, political and social changes to ensure a project’s sustainability in the long run. “Integrated industrial townships are always evolving; cities are living entities… Flexibility in planning is important to cater to our changing needs and aspirations to create better futures” – said Prof. Heng Chye Kiang.

At the end of the webinar, Mr. Huynh Quang Hai expressed his gratitude to enCity as Becamex’s partner consultant in the planning and development of its industrial park projects in South Vietnam, most notably the 1,750-hectare Binh Duong Science, Technology and Industrial Park (STIP), in addition to the ones in Binh Thuan (5,000 ha), Long An (2,400 ha) and Binh Phuoc (4,600 ha). With a vision of “transforming cities through innovation”, enCity strives to become a world-class “think-tank” and urban solutions provider, where we share our knowledge and contribute to building smart, sustainable and livable cities.