Foreign firms optimistic about potential of Vietnam's warehouse sector
Hanoi (VNA) – Despite negative impacts of the COVID-19
pandemic, Vietnam continues to be an attractive destination for foreign
investors, especially those operating in the warehouse sector thanks to its advantage
of geographical location and skilled labour force, according CEO of BW
Industrial Development JSC Lance Li.
While the pandemic left the world grappling with supply-chain and logistical
disruptions, the demand for warehouses has soared due to overwhelmed transport
networks and a surplus of raw materials to ward off inventory shortages, Mingtiandi.com of Thailand quoted Li in its article on November 28 as saying.
The pandemic has certainly led to an unfortunate series of events, however,
from a business perspective, it’s been an accelerant for warehouse demand, Li
said.
With a skilled and relatively inexpensive
workforce, rapidly improved infrastructure, and a growing number of trade
agreements that Vietnam is a part of, including the ASEAN Free Trade Area, the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (CPTPP), the
European Union-Vietnam Free Trade Agreements (EVFTA), and the Regional Comprehensive
Economic Partnership (RCEP), Vietnam continues to be an attractive destination for foreign
investment, he stressed.
The growth of e-commerce will lead to an upswing in warehouse demand
in Vietnam, which is still in a relatively nascent stage and accounts for only
5.5 percent of total retail sales, he said.
Modern, multi-storey warehouses are also on track to be rolled out faster in
the next few years, particularly around Hanoi and Ho Chi Minh City, where land
prices are high and strategic locations are in short supply, he said.
Vietnam has been a key beneficiary of the reallocation of manufacturing and
supply chain activities to Southeast Asia, he noted.
The tremendous growth
potential in e-commerce and high FDI influx to Vietnam have given foreign
investors a lot of confidence, he added.
The demand for warehouses has
skyrocketed in the past time due to the overloaded transport network and an
excess of raw materials to avoid stock shortages.
According to Li, the second year of the COVID-19 pandemic has been an active
year for BW. At the beginning of 2021, the company witnessed a threefold
increase in rental enquiries compared with the same period last year.
The company recently closed a deal
with J&T, a company engaged in logistics and package delivery, for a 5
hectare warehouse in a strategic location in Ho Chi Minh City.
Meanwhile, Wanek
Furniture, a key manufacturing company in the supply chain of one of the
largest furniture retailers in the US, Ashley Furniture, leased another 4
hectare site from BW in the southern province of Binh Duong.
Market demand skyrocketed in the
past two years, making BW’s factory in VSIP 2A industrial park in the northern
city of Hai Phong is already fully occupied following its construction
completion in early June 2021.
The health crisis is an opportunity for manufacturers and warehouse operators
alike to rethink their inventory strategy, Li said.
The global shipping
industry’s lack of containers left warehouses jammed with cargo for quite some
time before exporters were able to load it onto ships, Li said, adding
that these circumstances increased the demand for warehouses like never before./.