IPs mushroom as Việt Nam seeks to grab post-pandemic opportunities

May 21, 2020 - 08:10
This month ground was broken for Việt Phát Industrial Park, one of the largest in the country, in Long An Province.


A ready-built factory in Đồng Nai Province. Construction of such factories and industrial parks anticipates FDI flowing into the country after the pandemic subsides. — Photo courtesy of KTG Industrial

Xuân Hương

HCM CITY — This month ground was broken for Việt Phát Industrial Park, one of the largest in the country, in Long An Province.

Being built by TZICO Joint Stock Company and Việt Nam Innovation Parks Management Corporation in Thủ Thừa District’s Tân Long Commune, the 1,800 IP will include a 600ha urban area.

All the required land has been acquired.

Minh Đức LA Investment and Development Corporation broke ground for the 195.79ha Đức Hòa II-SLICO Industrial Park in Đức Hòa District also in Long An.

It will be the third largest IP in a cluster of 13 in Đức Hòa III.

KTG Industrial, the industrial development arm of Khải Toàn Group, recently began construction of a ready-built factory in Nhơn Trạch 3B Industrial Centre in Đồng Nai Province.

The 8ha facility is its second-generation ready-built factory, and combines factories, pre-built warehouses and technology 4.0 to enable digital convergence for tenants.

Long Hậu Corporation has built a 29.6ha high-tech factory for lease in Đà Nẵng City to serve the supporting and tech industries.

According to enterprises, there is a lot of investment being made in industrial parks and factories for lease to welcome a likely wave of FDI inflows after the pandemic subsides.

Đặng Trọng Đức, deputy general director of the KTG Group and sales development director of KTG Industrial, said, “Việt Nam has made great strides in economic and industrial development in recent years and attracted a large number of foreign manufacturers.

“The number of industrial parks in Việt Nam increased five-fold between 2000 and 2018. By the end of last year there were 338 IPs all with high occupancy rates: 92 per cent on average in the north and 80 per cent in the south.”

The country’s industrial real estate segment enjoys certain advantages, he said.

Free trade agreements that the country has signed offer incentives in terms of tariff duties and trade to manufacturers based in Việt Nam.

The Government offers corporate income tax, VAT and import-export tax breaks, visa waiver and other incentives to attract more investors, he said.

It has also paid great attention to infrastructure to facilitate cargo transport, he added.

He said with the cost of production in China continuing to rise, many manufacturers based there have expedited their relocation to alternative locations in Southeast Asia, including Việt Nam.

The COVID-19 outbreak has accelerated the move out from China, he said.

Don Lam, co-founder and CEO of investment fund VinaCapital, said a survey by Harris Polling this month found that over 70 per cent of Americans think US firms should scale back their manufacturing in China.

“There have also been an increasing number of articles in publications such as The Economist and Foreign Policy, as well as comments from notable investors like Mark Mobius and organisations like JETRO and AT Kearny predicting that Việt Nam is set to benefit from an acceleration in the movement of manufacturing out of China.

“For these reasons, we believe that a wave of FDI inflows is inevitable after the COVID-19 medical issue is resolved.”

Trang Bùi, head of markets at Jones Lang Lasalle (JLL) Vietnam, said thanks to its proximity to China, Việt Nam is one of the markets benefiting greatly from the trend of companies looking to diversify their manufacturing portfolio outside China.

Việt Nam’s outstanding record in containing the pandemic could strengthen foreign investors’ trust in the country, she said.

“The COVID-19 has had some impacts on FDI investment in Việt Nam in the short term due to travel restrictions. FDI inflows will recover soon after the pandemic subsides, offering great opportunities in the industrial real estate segment.”

Lê Thành, chairman and general director of TZICO Joint Stock Company, said: “Some big investors from South Korea and Singapore have shown great interest in the Việt Phát Industrial Park.”

Nguyễn Văn Út, vice chairman of the Long An People’s Committee, said the project is a significant development for the province to attract high-quality FDI amid the wave of investors shifting from China and increasingly setting their sights on Southeast Asia.

According to Stephen Wyatt, country head of JLL Vietnam, industrial park developers remained confident that demand for land will continue to grow and therefore land prices are expected to increase in line with the long-term potential of Việt Nam’s industrial segment.  — VNS