Major industrial parks in Vietnam manufacture products for global brands such as Louis Vuitton, New Balance, Calvin Klein, Apple, Swarovski, and others. How has a country without democratic freedoms or fully developed institutions managed to attract American and European investors from the democratic world? Oleksandr Bondarenko, Managing Partner of the Bureau of Investment Programs and Co-founder of NOVO Industrial Parks, explores the fundamental differences in the Asian industrial park model — and what Ukraine can take away from Vietnam’s experience.
What Do Ukrainian and Vietnamese Industrial Parks Have in Common?
After nearly 30 years of war ending in 1986, widespread poverty, and a lack of infrastructure, Vietnam not only rebuilt its economy, but also increased GDP per capita twelvefold from 2004 to 2024 — today reaching nearly $4,800 per person. Once a historically poor and underdeveloped country, Vietnam made an economic leap and joined the club of so-called Asian Tigers, countries that have maintained 6–7% annual economic growth over the past 10–15 years. In the early 1990s, Vietnam had fewer resources than Ukraine, yet began developing industrial parks as early as 1996.
Despite the shared ambition, Vietnamese and Ukrainian industrial parks have only one real commonality:
Tax incentives.
Both countries offer tax benefits to residents of industrial parks, but Vietnam’s incentive system is more nuanced. For example, while Ukrainian park residents receive a 10-year corporate income tax exemption, in Vietnam, depending on the production type, companies may be exempt from income tax for 5, 10, or even 15 years — provided that annual turnover remains within legal thresholds.
Land Incentives: Similar Concept, Different Prices
Like in Ukraine, Vietnam offers preferential terms for leasing or purchasing land within industrial parks. However, even with incentives, Ukrainian land is currently cheaper.
Comparison:
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1 hectare of industrial land in Ukraine: approx. $100,000
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1 hectare in Vietnam: $200,000 or more
Cashback Legislation: A Game-Changer for Ukraine?
It's worth noting that all incentives currently available under Ukrainian industrial park legislation may be offset by pending investment compensation bills (No. 13414 and No. 13415). These would provide cashback for manufacturing companies to reinvest in production, primarily in the form of tax refunds.
This system has long been implemented in the EU, where investors can recover 30% to 70% of the amount invested in new production facilities. In some countries, this compensation is even provided in direct cash payments.
If such a law is adopted in Ukraine, the location of the factory — whether inside an industrial park or not — may become irrelevant. As a result, the unique appeal of industrial parks could be significantly diminished.
The Path Forward for Ukraine’s Industrial Parks
For Ukraine’s industrial park development strategy to remain relevant and competitive, additional benefits and privileges must be granted specifically to park residents. Otherwise, industrial parks risk losing their strategic value — except in cases where a single company builds a park exclusively for its own use.