Many companies are moving their factories from other countries to Vietnam, showing the potential for strong development of industrial real estate. (Photo courtesy of Savills Read) HCM City (VNS/VNA) - Many companies aremoving their factories from other countries to Vietnam, showing the potential for strong developmentof industrial real estate, according to Savills Vietnam.
Savills Vietnam made the statement at a conference on September 4 in Ho Chi Minh City to release itswhite paper on Vietnam’s industrial realestate in the first half of this year.
They included many factories from China operating mainly in the fields ofelectronics, textiles, footwear and spare parts production, such as Hanwha, Yokowo, Shuafu, Goertek, Foxcom, Lenovo, Nintendo, Sharp, Kyoceraand Oasis, according to the report.
“Although occupancy in key provinces grew year on year, available landcoupled with an array of upcoming projects has seen foreigncompanies significantly increasing investment in Vietnam,” John Campbell, Senior Consultant, Savills Vietnam Industrial Servicessaid.
“Manufacturers are showing interest in the Central Regions whiledevelopers are actively converting agricultural land to industrial usage,guaranteeing additional supply.”
The industrial sector is growing strongly with a tenfold increase inforeign direct investment (FDI) over the last decade. Good land supply isfacilitating incoming manufacturing projects and the rise of rental optionswith ready-built factories (RBF) and built-to-suit (BTS) solutions. Vietnam must be more selective with projects to move up the value chain,improve competitiveness and ensure sustainable growth.
Low labour costs and government incentives, particularly preferential taxrates, will continue to be critical drivers of FDI. However, to maintain thetransition to higher-value industries, Vietnam must focus on the quality rather than the number ofinvestments.
By enabling the latest production technologies and increasing workforcetraining, the government is actively easing qualms around viability, labourshortages and rising costs for a more transparent business environment.
According to Savills Vietnam, the US-China trade war, additional investmentand new free trade agreements have all had a positive effect on Vietnam’s industrial sector.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)entered into force in January while the EU - Vietnam Free Trade Agreement (EVFTA) wassigned in June 2019. This historic and ambitious agreement will eliminate99 percent of customs duties and has raised interest in industrialproperty.
Regional Comprehensive and Economic Partnership (RCEP) negotiations areunderway and expected to be finalised at the end of 2019. Theagreement will increase cooperation between ASEAN countries and the sixAsia-Pacific states with existing free trade agreements.
In the first quarter of this year, about 326 industrial zones wereestablished, with a total area of 95,500 ha. Of which, 251 industrial zonesare under operation with an area of 60,900ha, accounting for 74 percent of the total, while 75 industrial parks are under construction,compensation and site clearance on a total area of 29,300 ha, according toSavills Vietnam. — VNS/VNA
