Central region’s logistics packs in investors

Investments into central Vietnam’s logistics sector have recently become more vigorous as the region is on the way to becoming the next area of development.

Robust investment

Singaporean heavyweight Sembcorp Industries on December 2 broke ground for its latest logistics property, Sembcorp Logistics Park Quang Ngai, the first modern ready-built warehouse in central Vietnam to date.

“Sembcorp strives to expand its industrial portfolio across Vietnam with a vision to provide manufacturers with quality logistics properties in strategic locations,” said Charles Chong, country manager in Vietnam of Sembcorp Development, a Sembcorp Industries subsidiary.

“Vietnam has grown exponentially through the years and will continue to be an important manufacturing base in Asia,” he stressed.

“We mark our latest milestone in warehouse development with these new modern ready-built warehouses in Quang Ngai, which is our third in the country and first in the central region.”

Partnering with the Singaporean major in the project are Hankyu Hanshin Properties (HHP), a developer of commercial facilities and residential properties with assets mainly located along railway lines in the western side of Japan, and CRE Asia, one of Japan’s largest management companies specializing in real estate properties for logistics operations.

Located in the Vietnam Singapore Industrial Park in Quang Ngai province, or VSIP Quang Ngai, Sembcorp Logistics Park Quang Ngai will be operated by Sembcorp Infra Services Quang Ngai, leveraging the sector expertise of Sembcorp, HHP, and CRE Asia to deliver highly functional and sustainable warehouses to manufacturers.

The warehouses will offer a wide range of modern features including automatic fire protection systems, loading dock platforms with elevated workspaces, high floor loading, high ceiling height, 24/7 general security and on-site facilities management.

The project showcases three blocks of single-storey warehouses with a total land area of six hectares and gross floor area of 35,500 square meters. Construction is expected to be completed by the fourth quarter of 2023. Goods can be readily transported to nearby logistics hubs like seaports (Chu Lai and Dung Quat), airports (Chu Lai and Danang) and the Danang-Quang Ngai Expressway.

Sembcorp has completed ready-built warehouses in Hai Phong city and Hai Duong province, both in the north.

Since Sembcorp started the VSIP joint venture in 1996 with Vietnamese leading industrial developer Becamex, VSIP has made significant progress over the past 26 years by growing and diversifying its industrial property portfolio across Vietnam.

In Danang city, the central region’s development hub, Dana Logistics JSC started this June work on its Dana Logistics Park at a 4.5-hectare site with a total investment of VND250 billion ($10.62 million).

The project will offer ready-built warehouses of 26,600 square meters also with modern features.

Under its development plans until 2050, Danang would host a logistics network including a series of sites like Lien Chieu Port Logistics Center, Hoa Nhon Logistics Center, New Kim Lien Cargo Terminal Logistics Center, Danang International Airport Logistics Center, Danang High-tech Park Logistics Center, not to mention retail logistics facilities and warehouses.

Work will start on December 14 on a sub-project of shared infrastructure for the Lien Chieu seaport project in Danang. The city administration is calling for private investors for the project’s first two container terminals.

“Two major foreign investors have shown strong interest. They are Sumitomo in Japan and Adani Group from India,” said Huynh Lien Phuong, director, Danang Investment Promotion and Support Board.

She added both Sumitomo and Adani were keen on taking part in a bidding event for the two container terminals, and that Danang authorities planned to hold the event in 2023.

Prime Minister Pham Minh Chinh, during a working visit to Quang Nam province this March, assessed Chu Lai seaport was likely to become an important transshipment hub for Central Highlands provinces and neighboring Laos. The PM asked Vietnamese conglomerate Thaco, which owns and operates Chu Lai seaport, to expand the facility to accommodate larger ships.

Thaco is now expanding the Chu Lai seaport to be able to handle container vessels of up to 50,000 tons.

Untapped potential

Nguyen Thanh Tuan, an expert from Vietnam Institute of Logistics Research and Development, says the central region has a lot of potential to develop logistics as a driving force for regional development.

However, he noted that the region’s business community is still quite small in terms of number, scale, and field of operation. The regional logistics sector is in urgent need of capital, human resources, and market access.

Regional logistics services have not been fully developed, according to him, with the main services being forwarding, leasing of means of transport, customs declaration, and warehousing; with costs for these services still high.

Nguyen Tien Quang, director of Vietnam Chamber of Commerce and Industry in Danang, says that central provinces should make use of the public-private partnership form to boost the development of logistics, as the private sector would bring more effective investment.