Industrial zones development and employment

Industrial zones development and employment for the people who lost their land in the process of  industrial zones development in Hanoi's suburb areas
by Le Thu Hoa & Vu Thi Hoai Thu

The dynamic development of urban areas with diversity of spaces, places, lifestyles and preferences can cause some consequences such as disparities, fragmentation, tensions and conflicts within urban areas which needs a cohesion for a sustainable urban future. There have not been a consistent concept on urban coherence, but it can be understood from the theory of complex interacting systems which seeks ways to handle different interests and conflicts in urban areas. Therefore, studies on urban coherence can be approached from physical, spatial, economic, social, political or cultural dimensions. This paper discuss the urban coherence from social-economic dimention with an emphasis on employment for the people who lost their land in the process of  industrial zones development in Hanoi's suburb areas.

Since 1992, Hanoi strategic and planning researchers have proposed the establishment and development of industrial zones in order to reorganize industrial space, create production areas for enterprises, minimize environmental pollution and encourage foreign enterprises and projects invested in Vietnam. Up to early 2007 there were four industrial zones operating on an area of 442 hectares in Hanoi with an occupation rate of 90.57%. There were 95 investment projects with a total capital of 1,201,599,030 USD and 120.54 billion VND in those industrial zones. 45,000 laborers were employed which accounted for 45% of total laborers that all FDI projects have created in Hanoi. The development of industrial zones in Hanoi's suburb areas has brought a large amount of capital for socio-economic development and growth, infrastructure development, capacity building for employees, and contributed significantly to the transformation of the economic structure toward industrialization and modernization.

However, the change from agricultural to industrial land has made many farmers lose all or partial land areas which played a significant role as production materials. This has resulted in the fast increase in unemployment, jobless and social issues. Up to 2005, on average, the recovery of one hectare of cultivated agricultural land affected 9.17 households, 34.84 inhabitants and made 13.94 employees jobless. After receiving compensation there were very few households using that amount for vocational training to find a job in industrial zones or in local small and medium enterprises. Some households opened businesses such as food service, vehicle maintenance, small trade ..., and deposited in banks. Most of them spent on house building and decoration, purchase of new equipments and luxury products. It seems that living conditions of the area have improved significantly. In fact that change had exposed great instability: unemployment and unstable earning sources. Moreover, a number of households spent their money on alcohol drinking, gambling, etc. which led to many social problems.

Less than 10% of total laborers of changed land households by industrial zone development has been recruited in enterprises in industrial zones. However,  most of them have only temporary jobs.

Hanoi local authority has adapted many specific measures and policies to solve the unemployment issue of changed land households such as (1) grant for vocational training; (2) requirement for the enterprise that uses one hectare of recovered land to be responsible for training and recruiting of at least 10 local employees; (3) organization of short vocational training courses like cooking, motorbike repair, garment, etc. However, these undertaken solutions turned out to be inefficient because of the following reasons:

  • Inefficient management capacity of the local authority
  • Limited capacity of vocational training centers.
  • Enterprises pay little attention to the responsibility for local employment recruitment.
  • Local laborers do not meet requirements of employers.

According to the Hanoi Master Plan to 2010 there will be seven concentrated industrial zones with a total planning area of 2,590 hectares, and the area will be three times as big as compared to present one. Therefore, effective implementation of government policies about employment for the changed land households will be an urgent issue.



Le Thu Hoa & Vu Thi Hoai Thu

National University of Economics


Faculty of Urbanisation and Environment

Tel: 84 4 38697382; 84 4 35651971

Fax: 84 4 38698231

ThuHoa_Industrial Zone & Employment in Hanoi's Suburb Areas.pdf294.81 KB