Vietnam’s industrial parks considered attractive amidst China-US trade dispute
No industrial zones are deep inland and the key ones are tied with seaports, underpinned by increasing investment in infrastructure.
Vietnam’s industrial parks are considered an appealing investment destination for various reasons including geographical advantages, close proximity to China, and enabling road transport, according to Viet Dragon Securities Company (VDSC).
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Labor costs in Vietnam are 43% and 10% lower than that of Thailand and Indonesia, respectively. The occupancy of Vietnam’s industrial zones was reported to be around 73% whereas more than 90% of industrial land in Thailand was occupied in mid-2018. Thailand is favored by the automotive industry while Vietnam has been chosen as a hub, in general, by electronic and accessories manufacturers.
Samsung, LG and other large corporations, who have been present for more than ten years in Vietnam, create a demand for northern industrial hubs. Strong bedrocks for manufacturing were therein established given the availability of specialized input providers and access to similar workforces, which is considered the “lock-in” effect, according to VDSC analysts.
This helps suppliers place their production close to customers. VDSC listed out potentials for lease demand from the increasing (1) production of OLED panels from Samsung Display and LG Display; (2) solar energy investments and (3) Vinfast incoming production.
Notwithstanding, large corporations are often offered at discounts whereas their suppliers should bring higher income for developers.
In 2018, Vietnam's industrial complexes and economic zones attracted US$8.3 billion in foreign capital in 2018, accounting for 23.41% of the total foreign direct investment (FDI) commitments in the period, according to the Ministry of Planning and Investment.
Vietnam currently has 326 industrial parks covering a total area of nearly 93,000 hectares as of the end of 2018. Among them, 250 are operational, together with other 76 in the process of site clearance and basic construction. The occupancy rate reached 73% at the operating industrial parks.
The ministry also informed that Vietnam has 17 coastal economic zones established on a land and water surface area of approximately 845,000 hectares by the end of last year.
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