Logistics 'the goose that lays the golden egg' for Vietnam: Cushman & Wakefield
Rapidly growing e-commerce and increasing warehouse demand are major factors driving logistics development in Vietnam, making it "the goose that lays the golden egg" for the country, a Cushman & Wakefield report says.
The U.S.-headquartered property service firm notes that from a low starting point with a 1989 GDP per capita of $100, Vietnam has grown to become one of the most attractive investment destinations in Asia over the last three decades.
The country’s per capita GDP increased to $4,100 in 2022, according to the General Statistics Office. Besides, it has speeded up its regional and international integration process and heightened its stature.
In the year to September 20, the total registered FDI capital in Vietnam reached $20.21 billion, an increase of 7.7% compared to the same period in 2022. This shows that Vietnam is currently "the shining star' in the Southeast Asia region, the report says.
![Vietnam's logistics sector teems with potential. Photo courtesy of Vietnam News Agency.](https://i.ex-cdn.com/theinvestor.vn/files/content/2023/10/07/hang-hoa-24520b-1445.jpg)
Vietnam's logistics sector teems with potential. Photo courtesy of Vietnam News Agency.
Cushman & Wakefield's annual survey of top global clients in 2022 showed India was ranked by over 60% of respondents as their preferred emerging market (excluding mainland China) in which to invest. On a first- and second-place preferred basis, Vietnam was the emerging market of choice, taking almost 80% of the votes, just ahead of India’s 75%.
It is particularly noteworthy that with a large market scale and a rapidly increasing number of online consumers, Vietnam's e-commerce market has also enjoyed a spectacular growth rate. E-commerce revenue in the first half of 2023, estimated at $10.3 billion, rose 25% year-on-year, accounting for 7.7% of goods and services revenue nationwide.
“With the development of the e-commerce industry, Vietnam has become the go-to destination for many businesses in the fields of manufacturing and logistics. This goes hand in hand with increased demand for high-quality logistics real estate,” the report quotes Trang Bui, general director of Cushman & Wakefield, as saying.
"Especially in the last few months of the year, when demand from the retail market is forecast to increase twice as much, the "thirst" for factory and warehouse supply becomes even more severe."
The report points out the total warehouse supply in Hanoi and Ho Chi Minh City only reached 2,022,000 m2 and 5,130,000 m2, respectively. High occupancy rates have been recorded in industrial parks and in major cities, especially Hanoi and HCMC, reaching nearly 100% in some areas.
“We forecast that this demand will become increasingly greater in the near future and our calculations show that supply might not be able to meet demand soon, which is why competitive pressure is increasing for retail and transportation businesses.”
China connection
Regionally, Vietnam is connected to China's southern economic corridor including many prominent regions such as Shanghai, Hong Kong, Shenzhen, Fujian and Guangdong. This is the economic region chosen as their headquarters by many giants in manufacturing, biochemistry, commerce, and electronic technology.
Cushman & Wakefield has estimated that this region accounted for more than 30% of China's total GDP in 2021, playing an extremely important role in attracting investment capital and economic development.
Early on in its development, Vietnam's industrial sectors received a wave of investment from global electronics businesses including Panasonic (1971), LG Display (1995), Canon (2001), Foxconn (2007), Samsung (2008), Fuji Xerox (2013) and more recently, from corporations like Pegatron, Goertek, Jinko Solar.
“Right now is the golden period as Vietnam looks at the opportunity to increase the value of manufacturers' supply chains and the region's GDP. Notably, President Biden's recent diplomatic visit concluded with many agreements on comprehensive cooperation and development of the high-tech and semiconductor manufacturing market between the two countries,” Trang Bui says.
“With favorable geographical characteristics, as well as strongly developed infrastructure and a series of investment promotion policies from the government, it can be said that Vietnam possesses the necessary factors to attract a series of ‘queen bees’ to nest and further contribute to Vietnam's GDP.
“The impressive numbers and promising forecasts we observed show that the potential of logistics in Vietnam is huge, it can completely become a "golden egg hen" for investors with strong vision and capacity,” she adds.
Infrastructure is as prerequisite for the country to achieve its full potential and for successful development of the logistics market. According to professional services giant PricewaterhouseCoopers (PwC), Vietnam is a leading country in Asia in infrastructure investment, spending about 5.7% of its GDP.
Nationwide, Vietnam has a total road length of 595,201 km, of which national roads comprise 25,560 km. The length highway networks currently in operation is 1,239 km, with construction underway on 14 routes and sections, equivalent to 840 km. Major cities like Hanoi and HCMC are giving priority to the Ring Road projects that will strengthen links to neighboring localities, increase freight connections, and reduce logistics costs related to seaports.
Meanwhile, the national railway network has a total length of 3,143 km with 277 stations; of these, two lines connect to China at Dong Dang in Lang Son province and Lao Cai province. In particular, the northern region has road, waterway and railway routes connecting directly with Shenzhen, known as China's Silicon Valley, creating favorable conditions for businesses wishing to expand and diversify production in the region.
Vietnam's seaport system in has received considerable investment attention with its current scale and technology reaching international standards, especially the container port system (two major seaports of Vietnam – Hai Phong and HCMC are among the top 50 major container ports in the world).
The seaport system has a total of 286 ports and a total wharf length of more than 96 km. According to data announced by the Vietnam Maritime Administration recently, the total volume of goods through Vietnam's seaports reached 733.18 million tons in 2022, up 4% year-on-yeaer. Of this figure, exports and imports reached 179.07 million tons and 209.26 million tons, down 3% and 2%, respectively.
Vietnam plans that by 2030, it will be able to meet the needs of import and export of goods, trade between regions throughout the country and trans-shipment and transit for countries in the region; as also cater to internal transport demand of both local and international passengers. The seaport system will be able to handle 1,423 million tons of freight (including container goods of 47 million TEU) and 10.3 million passengers.
Trang Bui says: “The manufacturing industry is at the heart of a country's economic development, and the health of an economy is directly proportional to the efficiency of its logistics system. Therefore, improving efficiency will help manufacturers, transport and logistics service providers minimize avoidable delays, thereby increasing production quality and reducing business costs.
“Given all the favourable conditions, Vietnam is completely capable of competing with Dubai and Hong Kong, even Singapore or Shanghai. It can not only strive to become a global goods trans-shipment hub but also a link in the global supply chain and the 'extended arm' of the world's factory.”
- Read More
HCMC prioritizes infrastructure, innovation hubs, data centers under new master plan
Ho Chi Minh City seeks to mobilize over VND4.4 trillion ($173 million) between 2026 and 2030 to implement key infrastructure projects such as ring roads, expressways, bridges, and seaports according to its newly approved master plan, said the city mayor.
Economy - Sun, January 5, 2025 | 8:00 am GMT+7
Vietnam has sufficient conditions to develop modern financial market: Prime Minister
Vietnam possesses all the necessary conditions to develop a modern financial market, including the establishment of international and regional financial centers, Prime Minister Pham Minh Chinh said on Saturday.
Finance - Sat, January 4, 2025 | 3:17 pm GMT+7
Vietnam's industrial hub Binh Duong province okays 23 projects
Binh Duong province, a manufacturing hub in southern Vietnam, on Thursday granted investment registration certificates and in-principle approvals to 23 projects, with total registered capital exceeding $1.7 billion.
Investing - Sat, January 4, 2025 | 2:15 pm GMT+7
Herbalife Vietnam fined $8,000 for violating multi-level marketing rules
The National Competition Commission has fined Herbalife Vietnam, a U.S-invested dietary supplement company, VND205 million (over $8,000) for its violations in multi-level marketing.
Companies - Sat, January 4, 2025 | 12:35 pm GMT+7
Vietnam to abolish VAT waiver for low-value imports amid e-commerce boom
Vietnam will scrap an existing regulation that exempts low-value imported goods from value-added tax (VAT) and import taxes starting February 18.
Economy - Sat, January 4, 2025 | 11:09 am GMT+7
China’s Universal Scientific Industrial to inject additional $2.8 mln into building Vietnam plant
Mainland China-based Universal Scientific Industrial (USI), an electronics supplier under Taiwan-based ASE Technology Holding, will pour VND70 billion ($2.8 million) more into its factory construction in Vietnam.
Industries - Sat, January 4, 2025 | 10:30 am GMT+7
Vietnam telecom giant Viettel logs record profit of $2 bln in 2024
The Military Industry and Telecommunications Group (Viettel) posted a record consolidated pre-tax profit of VND51 trillion ($2.01 billion) in 2024.
Companies - Sat, January 4, 2025 | 8:00 am GMT+7
Thai Prime Minister declares $400 mln in assets including 217 luxury handbags
Thailand’s Prime Minister Paetongtarn Shinawatra has declared her personal assets worth more than $400 million, including 217 luxury handbags and 75 luxury watches.
Southeast Asia - Fri, January 3, 2025 | 9:32 pm GMT+7
Thailand works to increase agricultural product value
Thailand's Department of Intellectual Property (DIP) plans to add 22 products to the geographical indication (GI) list in 2025, aiming to increase the market value of GI products to over THB5.9 billion ($171.4 million).
Southeast Asia - Fri, January 3, 2025 | 9:23 pm GMT+7
Thailand promotes investment in five 'future industries'
The Thai government aims to attract more investments in five core “future industries” by improving the ease of doing business through amended laws and regulations, according to Jirayu Houngsub, spokesman for Prime Minister Paetongtarn Shinawatra’s Office.
Southeast Asia - Fri, January 3, 2025 | 9:19 pm GMT+7
Vietnam PM orders construction of 2 LNG-fired power plants to begin in Q2
Vietnamese Prime Minister Pham Minh Chinh has instructed the construction of two LNG-fired power plants in Quang Ninh and Thai Binh provinces to begin in the second quarter of this year.
Energy - Fri, January 3, 2025 | 5:26 pm GMT+7
VN-Index records sharpest decline in 5 months
Vietnam's benchmark VN-Index dropped 15.12 points, or 1.19%, to 1,254.59 on Friday, marking its deepest fall in five months.
Finance - Fri, January 3, 2025 | 5:00 pm GMT+7
Apple supplier Luxshare-ICT to invest extra $11.5 mln in central Vietnam
China’s Luxshare-ICT, a supplier of Apple, will invest an additional $11.5 million in Vietnam’s central province of Nghe An, according to a project report.
Industries - Fri, January 3, 2025 | 4:41 pm GMT+7
Vietnam's steel heavyweight Hoa Phat to start operating $3.34 bln factory in 2025
Vietnam’s leading steelmaker Hoa Phat will start operating its VND85 trillion ($3.34 billion) steel plant in the central province of Quang Ngai in 2025.
Companies - Fri, January 3, 2025 | 3:50 pm GMT+7
Vietnam needs 2,400 staff for 2 nuclear power plants, only 460 people trained
Vietnam requires approximately 1,200 staff to operate a 2,000 MW nuclear power plant, or 2,400 are needed for two 2,000 MW nuclear power plants in the central province of Binh Thuan.
Energy - Fri, January 3, 2025 | 12:02 pm GMT+7
Vietnam's steel industry to record profit growth in 2025 on rising domestic demand: broker
Vietnamese steel makers are expected to continue recording positive profit growth in 2025, but at a lower pace, according to leading broker SSI Securities.
Companies - Fri, January 3, 2025 | 11:33 am GMT+7