Phase two - Feasibility studies

The key elements of feasibility studies include, but are not limited to, the following:

• Business plan,

  including a definition of the industrial park site and location, logistical positioning and connectivity, overall value proposition for users, competitive market positioning and factors for differentiation, proposed services and amenities, investment incentives, and basic land and services pricing strategy for industrial park users. It also involves preparing a conceptual masterplan and zoning plan, subdivision plan, utilities plan, amenities and specialized infrastructure plan.

• Technical assessment and plans,

  which describe the site’s physical context, the project’s geo-technical specifications, engineering and architectural plans, and transportation management plans.

• Analysis of the latent and phased investor market potential,

  including identification of priority sectors targeted, the competitors and the degree of competition, critical investment and production trends in the target sectors, projected volumes and ramp-up timeframes for investment, the sales projections (including for exports) and the prospective markets, and the resulting land take-up/absorption projections impacting the project’s revenue modeling. It also involves identifying promotional vectors for the marketing campaign, potential market threats and the various ways to overcome them.

• Financial modeling and projection of funding needed,

  including project capital and operational expenditures, revenue streams and Return on Investment (ROI), as primarily captured through Net Present Value (NPR), Internal Rate of Return (IRR) and discount rate.

• Source of finance,

  including an analysis of available sources of capital and of the project’s proposed financial structuring model, as well as the financial sustainability and financial stakeholder risk-sharing mechanism.

• Impacts study,

  including “overall value chain” competitiveness; projected investment levels and their breakdown (by sector, origin), induced employment and fiscal impacts; impacts on country policies on poverty reduction, food security and rural transformation; public expenditure requirements (including through subsidies and other forms of financial support); trade impacts; and overall ERR and EVA modelling.​​​​​​​

• Definition of the service delivery model,

  and corporate and legal structure, including details of the nature of the corporate vehicle that will be used to develop and operate the industrial park, the extent of participation from the public and private sectors in it, and their respective roles and responsibilities in terms of the design, the financing, the ownership, the development and the operation of the project.​​​​​​​

  There are different tools and methodologies for feasibility analysis, including UNIDO’s “Computer Model for Feasibility Analysis and Reporting” (COMFORT) to help decide final go/no-go decisions regarding whether to proceed with the project.

Industrial parks represent an effective industrial policy instrument because they can be used as a policy microcosm, either through the geographically-concentrated application of national industrial policy or through a dedicated subset of policies applied to industrial parks.

A successful industrial parks programme requires an extensive regulatory and institutional framework, which in turn fosters institutional collaboration and policy coherence if implemented successfully. The required policies and strategies will be developed based on the results of the pre-feasibility studies. Some of the relevant policies for industrial parks include:

• Investment policies and legislation;
• The development plan, including industrial policies;
• Education, science, technology, and innovation policies;
• Legal and regulatory framework;
• International and regional, as well as bilateral agreements;
• Specialized industrial park policies and regulations;
• Institutional setup(developer, regulator and operator);
• Sustainability and green development policies.

Because they are governed as often as not by a patchwork of national laws and policies, not all industrial park programmes have dedicated or specific enabling legislation. When they do, some of the areas’ industrial park legislation may cover includes the following:

• Efficient industrial park location selection;
• Connectivity infrastructure and facilities
• Linkage, including between industrial parks and markets;
• Infrastructure planning and development control frameworks;
• Rights with respect to the establishment, use and operation of infrastructure;
• Investor qualifications and plot allocation;
• Investment incentives;
• Cluster support programmes;
• Environmental and social obligations of industrial park developers, operators and users;
• Enhancing co-operation among enterprises in industrial parks, as well as between industrial parks and research centres; and
• Designation and organization of the industrial park governance framework.
• Administrative support mechanisms such as ‘one-stop shops’.

Some of the more successful industrial park programmes have developed institutionalized and important components of industrial park management, grounded in continuous listening to the industrial park investors’ experiences regarding how prevailing laws and regulations, performance requirements, incentives and administrative practices affect their operations, and what changes would support them in expanding (and thus their economic impact).

Preparing Industrial Park Master Plan:

Industrial parks development should be based on well-defined master plans. Master planning has a lasting impact on how an industrial park develops, operates and is integrated into surrounding areas and communities. It defines the connection between the topography, land use, infrastructure, public right-of-way, buildings, social settings, and their surrounding environments. Master plans should be prepared based on existing public plans, as well as new site-specific surveys, investigations and analysis. Proper comprehensive master plans start with a feasibility study.

Major issues in industrial parks master planning:

• Land use and layout: Appropriate division of the whole area into several identified activity centres of different sizes. Development of the layout with a complete understanding of the phasing program is critical. Integration of the financial aspects of physical planning aspects is among the most important factors for sustained implementation.
• Constraints and core offering of the site: The planning has to consider all the site-specific constraints and appropriate mitigation measures to overcome the limitations.
• Addressing unavailability of housing for the workforce: The planning should include conceptualising integrated township with multi-format development, enabling a substantial work-live-play concept. The master plan should address the lack of enforcement/control of land use and the growth of unapproved housing/layout.
• Uneven distribution and concentration of industrial growth pockets: A structured industrial zoning should consider raw material, effluent generations, pollution level category, and product distribution.  Accordingly, these considerations govern the planning of zones/ subzones in the IAFP.
• Shortage of skilled/trained workforce: An industrial park should house training centres, skill development and employability improvement centres.
• Conservation of groundwater and surface water resources: The activities include sustainable infrastructure planning, incorporation of eco-friendly concepts and environmental sustainability, water conservation schemes, environmental infrastructure, recycling and reuse options.
• Transportation: The master plan should look at the transport linkages, both regional and national linkages. Planning a well-developed logistics hub for both raw material and the finished product to cater to the transport systems is a significant intervention
• Poor quality of roads and traffic congestions: The plan should identify the constraints and intervention suggestion such as appropriate road network including the approach roads, road congestion removal by the provision of grade separators and hinterland connectivity, augmentation/widening of existing roads.
• Environmental management: Various aspects such as adherence to pollution control norms and standards control over goods, storage, and handling of industrial waste, a common treatment assumes importance while planning

Industrial Park Zoning:

Industrial parks should be configured and organized in accordance with the expected uses of the land within them. It is always an advantage for an industrial park to have different zones for different types of industrial and non-industrial activities. Zoning helps by encouraging on-site economies of scale in utilities infrastructure concentration and utilization, for instance as regards waste collection and treatment, wastewater recycling, internal transport networks and other amenities. It also smooths vehicular and pedestrian circulation by enabling clear movement patterns. Zoning within the park can be designed furthermore in such a way as to encourage industrial symbiosis for the utilization of materials, industrial water and energy by-products.

Typical segregated internal zones in an industrial park context:

• Industrial zones for targeted sectors - these include industrial plots, industrial factory shells, and multi-story industrial units for non-polluting or medium-polluting industries;
• Amenities zones - these cover information centres, training centres, R&D facilities, clinics, administrative buildings, shopping centres, fire stations, weigh stations, fire stations, etc.;
• Special infrastructure zones - these cover certification laboratories, quarantine services, market intelligence unit, etc.;
• Logistics zones - these cover loading and unloading yards, parking lots, packaging facilities, transportation hubs, cargo-handling centres, raw material collection and storage depots, goods storage warehouses, etc.;
• Utilities zones - these cover solid waste collection centres, electrical sub-stations, CETPs, etc.;
• Residential zones - these cover multi-format worker housing, guesthouses and hotels, etc.; and
• Green zones - these cover green belts and buffer zones along the park’s boundaries, lawns, parks and water features, internal walkways between zones, etc.

Engineering Design:

A crucial factor in any infrastructure project is the quality of its engineering plans. Their planning and construction require the preparation of scale drawings and layouts, the selection of appropriate technology and equipment, site preparation and construction planning, project delivery scheduling, and approvals by the relevant authorities.

In recent years, the issue of environmental sustainability has become a key consideration in industrial park engineering. The main principles of sustainable engineering are shown below:

When engineering plans are ready, requiring an independent third-party review is a sound practice in order to ensure that the design meets all the pre-determined requirements and standards, and provides a sound basis for achieving the project’s objectives. The appropriate degree and level of review will depend on a number of risk factors, but even low-risk projects should, at a minimum, go through at least a basic peer-review process.

An industrial park provides concentrated critical infrastructure to support the development of the industrial sector. It is important to bear in mind that an industrial park’s infrastructure requirements may vary based not only on the type of industries likely to invest at the site but also based on the previously-existing infrastructure on-site or in the vicinity. Infrastructures categories crucial for industrial parks:

Infrastructure planning should be established based on existing plans, as well as on new site-specific surveys and assessments. Fundamental principles of infrastructure planning:

• All the infrastructure should be modular, functional, cost-effective and flexible to take gradual occupancy into account;
• Waste minimization/sustainable & green concepts;
• Life cycle operation, and management costs, and value for money analysis from developer and unit occupant perspectives;
• Phased development; and
• The various infrastructure development options and alternatives.

The development of an industrial park requires the acquisition of a plot of land of the appropriate size, based primarily on phased occupancy demand projections, but also large enough to accommodate facilities and associated maneuvering areas with an efficient building layout, right-of-way and greenspace. The size of the plot depends on the planned number of enterprises, the requirements for ready-made factory shells and the extent of the common infrastructure and services needed on the site, as well as surface buildout ratios and setbacks.

The process for obtaining land may differ by city, province, or region within countries, and the acquisition process can take different forms depending on the region’s land ownership policy. Land ownership can be purely private, joint or state-owned. In some countries, the government provides land to industrial park developers free of charge or at a minimum cost as part of an incentive package, whereas in other countries the land is sold, made available on a concession basis or leased, under varying terms and conditions.

Relevant considerations in land acquisition:

• Preference for parcels held by one or a few owners or that do not require assembling parcels, in order to avoid delays during the acquisition process;
• Consideration of possible future expansion, in terms of site size and zoning;
• Environmental and social impact considerations;
• National legislation and international guidelines and practices regarding the acquisition and/or expropriation;
• Integration with local and regional planning; and
• Consideration of ancillary industries.

Environmental and Social Impact Assessments(ESIAs)

Environmental and Social Impact Assessments (ESIAs) must underpin site master planning, and predict and evaluate a project’s environmental and social impacts on the ecosystem, bio-physical and human environment, as well as propose any required project impact mitigation or management plans and, where appropriate, rehabilitation and/or compensation plans

ESIAs assesses the project’s effects on:

• Ecosystems;
• People;
• Properties:
• Heritage sites and social services in the host and adjacent communities

ESIAs should, in addition, lay the basis for ongoing assessment of socio-economic and environmental impacts throughout the project’s lifespan, including during:

• Pre-construction activities (e.g., relocation of people displaced due to the project, etc.);
• Construction activities (e.g., land clearing and site preparation, infrastructure construction, etc.);
• Post-construction operational activities (e.g., maintenance, etc.).

The environmental assessment covers baseline data regarding:

• Site soil and hydrology characteristics
• Projects’ anticipated impacts on air quality, noise levels, water quality, etc.
• Connectivity and/or buffer zones to maximize the off-site and on-site synergies for adjacent communities.
• Social impacts in terms of employment, community welfare and inclusion, safety, heritage and identity, through a proper Socio-Environmental Management Strategy.

Environmental and Social Mitigation Plan (ESMP)

The ESMP should be prepared either as an integrated element of the ESIA or as a separate document. The plan should set out the measures required to maximize the project’s benefits as well as to minimize and/or remedy any adverse impacts or externalities. It ensures that the environmental and social impacts and risks identified in the ESIA process are effectively managed. The ESMP, amongst other things, addresses the following:

• Setting out an environmental and social management measures action plan;
• Defining responsibilities for specific actions, timeframes for implementation, and associated budgets;
• Actively engaging with the affected people and communities;
• Identifying monitoring mechanisms in relation to project social and environmental performance, and compliance with related statutory requirements; and
• Outlining capacity-building requirements for the effective implementation of the plan.

Many Development Finance Institutions (DFIs) have policies, guidelines and tools to effectively integrate environmental and social considerations into their operations that can help industrial park developers in preparing these assessments and plans.

• The Asian Development Bank's (ADB)

  The Asian Development Bank's (ADB) current safeguards policy builds upon the three previous safeguard policies: the Involuntary Resettlement Policy (1995), the Policy on Indigenous Peoples (1998) and the Environment Policy (2002). In addition, environmental safeguard elements are included in ADB’s water, energy and forestry policies. ADB carries out screening and categorization at the earliest stage of project preparation, in order to ensure that they (i) reflect potential impacts; (ii) commit the appropriate level of resources for safeguard measures; and (iii) meet disclosure requirements.

• The European Investment Bank (EIB)

  The European Investment Bank's (EIB) environmental and social safeguard policies, and the principles, practices and standards they embody, are based on the EU’s 2006 Declaration on the European Principles for the Environment (EPE). Environmental considerations are taken into account at all stages of the project cycle. All projects financed by the EIB are subject to an Environmental Assessment (EA), normally carried out by its own staff, but, if by others, according to EIB requirements. Social issues now are also assessed and focus on labour standards, occupational and community health and safety, population movement and resettlement, minority rights (including those of indigenous people, women and vulnerable groups), public consultation and participation, and cultural heritage.

• The World Bank Group (WBG)

  The World Bank Group (WBG) has an environmental and social framework that sets out the Bank’s commitment to sustainable development. The framework requires borrowers to conduct ESIAs on projects proposed for World Bank support. The World Bank’s safeguard policies recognize the importance of borrowers’ early and continuing engagement and meaningful consultation with stakeholders, including communities, groups, or individuals affected by proposed projects. The World Bank Group also requires the provision of a grievance procedure to receive and facilitate resolution of the concerns of project-affected parties.

• The African Development Bank (AfDB)

  The African Development Bank (AfDB) adopted its Environmental Policy in 1990/2004, a set of Environmental and Social Assessment Procedures (ESAPs) in 2001, and an Involuntary Resettlement Policy (IRP) in 2003, clearly setting out AfDB’s environmental and social safeguards. The 2003 IRP pays particular attention to the cultural or religious significance of land, the vulnerability of the affected populations, and the availability of in-kind replacement for assets that may have important intangible implications. The AfDB requires a borrower to develop a Resettlement Plan (RP), with active participation and in consultation with displaced persons and host communities, where physical displacement and loss of economic assets are unavoidable. Expropriated assets should be compensated at “full replacement” cost prior to commencement of project activities.