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Viet Nam
Industrial Park Situation
Text by Saito Hiroshi
The 11th: English abbreviations related to industrial parks and the manufacturing industry
In Vietnam, when researching various industrial parks to start manufacturing operations, English abbreviations are often used. Therefore, this time, I would like to focus on introducing abbreviations commonly used in industrial parks or manufacturing.
1. RBF (Ready Built Factory)
In Japanese, it is called “レンタル工場” (rental factory), but in foreign countries, the common term used is “RBF” (Ready-Built Factory).
This describes a “ready-built factory,” where the facility’s structure is already constructed, requiring only interior work and installation of machinery to start operations immediately.
2. GFA (Gross Factory Area) /GLA (Gross Lease Area)
In the case of rental factories, the Gross Lease Area (GLA) includes not only the factory area but also the areas such as offices and toilets, which are subject to rent. Therefore, GLA (“総賃貸面積”) refers to the total lease area. The monthly rental fee for the rental factory is calculated by multiplying the rent rate per square meter by this GLA.
3. BTS (Build to Suite)
Based on the client’s request, industrial park developers construct custom-made factories by initially paying for construction costs. These costs, along with land fees, are then paid back through lease agreements spanning 5 to 10 years.
This is a relatively new scheme introduced in Vietnam a few years ago, whereas it has been practiced in Europe and Thailand for many years.
Many companies opt to use this scheme to minimize initial investment when constructing large factories or warehouses measured in hectares (ha).
4. EIA (Environmental Impact Assessment)
In Vietnam, when manufacturing operations commence, companies must apply for Environmental Impact Assessment (EIA) from the Ministry of Environment before starting interior work. For the application, detailed data such as “manufacturing process charts,” “list of chemicals used in the manufacturing process,” and “description and quantity of waste” must be submitted to the authorities. Due to the complexity of this process, it is usually advisable to delegate the application to an agent. In recent years, awareness of environmental protection in Vietnam has increased, leading to cases where EIAs are not granted for industries involving processes like plating or dyeing.
5. EPE（Export Processing Enterprise）
Export processing enterprises refer to companies established and operating within export processing zones or industrial parks/economic zones, exporting all their products. Being certified as an EPE (Export Processing Enterprise) offers the benefit of tariff exemptions on imports and exports. However, the certification conditions are stringent, and changing the status in the future to sell domestically in Vietnam requires ceasing operations for several months. Therefore, currently, it is perceived that there are not many advantages to being certified as an EPE. In the case of rental factories, it is challenging to meet the conditions for EPE certification because adjacent factories may complicate meeting the criteria.
6. MRP（Material Requirements Planning）
MRP (Material Requirements Planning) is a production management method that involves creating a production plan for finished products in advance. Based on this plan, the required amount of materials and delivery dates for manufacturing are calculated backwards to order and produce. It was developed in the 1960s. Its advantages include eliminating excess or insufficient material inventory, reducing work-in-progress and finished goods inventory, and compressing product lead times.
7. ERP（Enterprise Resource Planning）
This is known as Enterprise Resource Planning (ERP), which evolved from production management methods for factories to comprehensively manage an entire enterprise from the perspective of “business resources.” ERP aims to optimize the allocation of resources such as manufacturing, production, inventory, procurement, human resources, payroll, finance, and accounting to maximize the utilization of business resources (people, materials, money, and information). It was developed in the 1990s as an advancement from the aforementioned MRP, aiming to streamline management efficiency.
8. SCM（Supply Chain Management）
This is known as Supply Chain Management (SCM), which integrates the flow of products from sourcing raw materials and components to manufacturing, inventory management, sales, and distribution. By enabling each department and company within the supply chain to share information, SCM aims to optimize the efficiency of the entire supply chain. Real-time exchange of information allows for supplying materials and products in required quantities to necessary locations, reducing excess inventory, lowering costs, and compressing lead times.
9. FRP（Fiber Reinforced Plastics）
This is about “fiber-reinforced plastics,” commonly represented by GFRP (Glass Fiber-Reinforced Plastics), which are resins (such as unsaturated polyester resin, epoxy resin, phenolic resin, melamine resin, etc.) reinforced with fibers (such as glass fibers, carbon fibers, aramid fibers, etc.). By combining these materials, various properties can be achieved. They are known for high strength, lightweight, corrosion resistance similar to metals (non-rusting), excellent weather resistance, corrosion resistance, and thermal insulation properties. They also offer good formability and are cost-effective.
I want those involved in manufacturing abroad to remember such three-letter abbreviations.
齊藤公(Saito Hiroshi)
Business Advisor
G.A. Consultants Vietnam Co., Ltd
After graduating from university, he joined a PHP research institute and served as the head of the New York office. He then worked on the “Nagoya Port Redevelopment Project” at a subsidiary of the Chubu Nippon Broadcasting (CBC) company. He later shifted his base to Asia, where he was involved in the launch of “FM96.3” in Singapore, and the creation of “Hello Vietnam” and “Invest Asia” magazines in Vietnam. He then joined BW Industrial Development JSC, Vietnam’s largest rental factory development company, where he was responsible for attracting Japanese manufacturing companies. Currently, he is active as a consultant for the entry of Japanese companies at “G.A. Consultants”, one of the longest-standing Japanese HR consulting firms in Vietnam.
