Phase six - Sustainable management and operations

As noted immediately above in the discussion on dedicated industrial park legislation, some of the reasons such laws may be required are in order to make the industrial parks’ legal compliance obligations and interface with government oversight agencies more efficient. Specific mention was made, in that context, of the value of establishing one-stop shops for the delivery of administrative services   to business. Indeed, dedicated staff from each relevant line ministry or agency should be assigned to a one-stop shop to offer a seamlessly-integrated administrative services package to investors. Whether such enabling legislation is adopted or such one- stop shops are established through sub-statutory and administrative means, such as inter-agency memoranda of understanding and service-level agreements and their usefulness and importance to investors are certain. Some examples of industrial park one-stop shop programmes may be found in Box 16, below:

Industrial parks host a wide range of stakeholders. Efficient and coordinated operation of the industrial park is often a challenge in this context, due to the diversity of these actors and their interests, and their different levels of involvement in the industrial park. An industrial park one-stop shop with proper decision-making power is a good solution for providing a single point of contact to facilitate the various stakeholders’ requirements, particularly for regulatory compliance. It improves administrative efficiency in obtaining necessary services and government approvals, as well as simplifying the associated procedures. If the park operator was a private entity, it would usually be unable to provide these services, beyond a “front office” facilitation function. The types of services provided by one-stop shops, and the type of institutions represented, vary depending on national laws and the characteristics of each industrial park. Around the world, the following services may be provided by an industrial park’s one-stop shop:

• Business registration and licensing
• Investment incentives information
• Employment permits
• Planning and construction
• Social security registration and account management
• Tax and custom services
• Port or airport cargo clearances
• Access to publicly-funded innovation and start-up promotion services
• Quality control services (e.g. lab testing)
• Utilities (electricity, telecom, water and gas) account management
• Environmental approvals
• Legalisation and notarisation
• Tourism information services
• Land administration
• Access to banking services (provided by commercial banks located on-site or in separate premises)
• Access to housing

An industrial park can be developed and operated by the government – at the national, state or local level; by private enterprise – whether by a construction company developer or consortium, or manufacturers association; or by some sort of public-private partnership (PPP) – for instance through a joint venture between government and private enterprise. Different government ministries, public agencies and state-owned development and facilities management corporations regularly invest in industrial parks, given the public interest they present for the economy.

The developer or owner, whatever its ownership structure, pays for the initial development of a park and then, during the operations phase, leases or sells the developed and serviced plots and/or factory shells to private firms in order to recoup its costs. Furthermore, regardless of the industrial parks’ ownership model, the private sector invariably plays a vital role in them, both as the parks’ residents, and also very often as the design consultants, construction contractors and manager of public projects. This participation by private firms provides critical expertise and, in so doing, reduces government risk.

Where the operator is a separate entity from the site’s owner or developer, the industrial park owner or developer is responsible for establishing and defining the industrial park operator’s specific responsibilities, to be enshrined in an “Operator Agreement”.

Industrial park management approaches:

• Management by public entity: Public management is a widely-adopted approach in many developing countries, where a government has a large economic stake in an industrial park. This can either be done directly by a Ministry, Agency or Authority, or through a commercially-oriented State-Owned Enterprise (SOE) or Special Purpose Vehicle (SPV). In the latter scenarios, the government owns, founds and invests in the company, giving the State strong influence over day-to-day decision-making regarding the park’s operations
• Management by a private entity: Under this model, the park operator, a private company, is contracted by the industrial park’s owner/investors, sometimes including resident firms that own plots and factory buildings in the park. This approach is mainly adopted where private investors have largely investments and/or own industrial parks. Private management contracts to specialized facilities management companies are also regularly established at government/state owned industrial parks; and
• Joint management by public and private entities: Industrial parks owned in public-private partnership are jointly managed by the government and private investors. While the power-sharing mechanism described in the SPV’s Articles of Association allows the parties to divide responsibilities as they deem most appropriate, it almost invariably leaves day-to-day park management and technical decisions to the private partner(s), vesting the public partner(s) with land acquisition, compensation and resettlement, and government relations and interface (for instance around required permits).

Responsible labour relations management has a direct influence on the sustainability of industrial parks as it affects the size, morale and productivity of the workforce. Due emphasis should therefore be given to ILO Labour Standards, in particular, the following aspects of labour relations management:

• Decent work - Industrial operators should ensure employees’ right to proper working conditions and such rights as equal pay for equal work. A widely-adopted practice in this respect is for operators to undertake due diligence on the enterprises during the resident identification and approval processes, in order to identify firms with poor social and safety records;
• Labour unions - Labour unions should be permitted in industrial parks in accordance with the host countries’ applicable rules and regulations; and
• Legal issues and dispute settlement - It is vital to establish a mutually-agreed dispute settlement mechanism for conflicts arising within an industrial park.

In order to define industrial park success, it is necessary to establish a reference framework as for examplea set of goals against which to measure performance, along with key performance indicators (KPIs). KPIs can be defined for an entire industrial park, an individual facility, or various processes at the park or an individual facility.

In line with the core ‘inclusive and sustainable industrial development’ (ISID) principles, UNIDO guidelines for industrial parks set forth three indicator categories comprising a total of 13 key industrial park performance indicators: economic performance indicators, social performance indicators and environmental performance indicators.

Economic performance indicators relating to the ISID pillar “advancing economic competitiveness”:

• Good economic governance
• Economically-enabling site & infrastructure ‘hardware’
• Economically-enabling services ‘software’
• Economically impactful nature*

Social performance indicators relating to the ISID pillar “creating shared prosperity”:

• Socially appropriate site & social infrastructure
• Quality social management system & social services*
• Occupational health & safety*
• Good labour relations & welfare*
• Social inclusiveness

Environmental performance indicators relating to the ISID pillar: “safeguarding the environment”:

• Environmentally appropriate site
• Green infrastructure
• Green systems*
• Efficient & clean production, emissions & waste management*

* Indicator inappropriate to the evaluation of new sites that are not yet fully-operational (the remaining, italicized and non-asterisked indicators being more appropriate, with minor input adjustments).