Vietnam’s rapid growth and supply chair diversification efforts by MNCs are bringing ample development opportunities to the country’s industrial real estate industry, says Deep C Industrial Zones CEO Bruno Jaspaert.
“The sky is the limit,” he said Thursday at the Vietnam Industrial Property Forum (VIPF) 2023 held in Ho Chi Minh City, stressing that MNCs continued to seek industrial real estate developments for new projects and expansion plans.
“They need land, energy, water, workforce and government support to do business, and Vietnam offers all the elements well.”
Therefore, “Vietnam stands for a very bright future… Golden opportunities are here,” he said.
Jaspaert has helmed Deep C, an industrial zones and seaports system developed and operated by Belgian investor Rent-A-Port in Hai Phong and Quang Ninh province, for five years now.
Vietnam’s participation in international free trade agreements (FTAs) had continued to deliver significant trading benefited and increase investors’ market size, Jaspaert said.
Vietnam signed it latest FTA with Israel on July 25, opening up more opportunities for both sides to boost their trade and investment ties. This will be followed up the early October launch of the first direct air service between the two countries.
In mid-July, the UK signed documents to become the 12th signatory to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP); and the first European country to be part of the pact. Vietnam is one of the 11 existing members from the Asia-Pacific region.
Besides, Vietnam’s land lease prices continue to remain lower, in general, than its ASEAN peers, Jaspaert said.
Meanwhile, the “China Plus One” trend has been reinforcing towards Vietnam, he added.
Lots of MNCs have been moving manufacturing to the Southeast Asian countries, with Taiwanese electronics makers standing out. Big names like Foxconn, Pegatron, Wistron, and Compal have led the move to Vietnam.
The country’s position will be further strengthened by applying the Global Minimum Tax, (GMT) as it is preparing to do, the Deep C CEO said.
In late July, Prime Minister Pham Minh Chinh said at a regular cabinet meeting that the Vietnamese government would submit its GMT resolutions to the National Assembly, the country's highest legislative body, for approval in October.
The GMT is expected to be applied in Vietnam in early 2024. The PM affirmed the early implementation of GMT is essential to ensuring the country’s rights and benefits, and additional support policies are necessary to maintain the attractiveness and competitiveness of Vietnam’s investment environment.
Vietnam has also offered foreign investors several generous tax breaks to encourage them to establish plants and businesses across the country. This has helped cement its place as an important part of global supply chains and a major global manufacturing hub.
Tran Quoc Phuong, Deputy Minister of Planning and Investment of Vietnam, said at the Thursday forum: “Many foreign investors consider Vietnam as a priority option in their bid to diversify their supply chains, keep up with the country’s economic recovery and benefit from the loosening of its monetary policies.
“Vietnam has seen clear signs of recovery in relation to FDI attraction, leading to a new wave of overseas investment and rising demand for industrial property,” Phuong said.
Registered FDI capital in Vietnam rose 4.5% year-on-year to nearly $16.24 billion in the first seven months of 2023, the first hike so far this year, according to the planning ministry. In July alone, registered FDI hit over $2.8 billion, up 8.9% from June, 41.9% from May and 85.7% year-on-year.
Continuous development
Industrial real estate developers have continued efforts to further tap the Vietnamese market.
Singapore-based SP Group (SP), a leading energy utilities group and sustainable energy solutions provider, announced Thursday it has signed an MoU with developer Frasers Property Vietnam (FPV) to jointly develop and implement integrated smart energy solutions at the latter’s Binh Duong Industrial Park in Binh Duong province.
The new partnership will help the IP accelerate its adoption of green energy solutions, enable energy savings and carbon emissions reduction for all tenants.
SP will design, invest, install, operate and maintain integrated smart energy solutions for the park’s industrial service center. This will include the installation of solar panels, digital building solutions, electric vehicle charging and smart energy optimization and management systems.
The partnership with FPV highlights SP’s commitment to help Vietnam’s energy-intensive sectors decarbonize, and to contribute to the country’s sustainability targets, the Singaporean company said.
Going green is playing a significant role in Vietnam’s growth, Jaspaert said. He said an Indonesian government mission will visit his company’s facilities in northern Vietnam to obtain ESG (environmental, social, governance) investment insights..
Texas-based project development company Energy Capital Vietnam (ECV) signed a cooperation agreement with four partners in late July to develop net-zero industrial parks in Long An province, which borders HCMC, to help advance the country’s decarbonization goals.
The four partners are: HCMC-based IT and industrial property developer Saigontel; Allotrope Partners (an international clean energy advisory firm specializing in emerging markets and technologies); Chart Industries (listed on the New York Stock Exchange as GTLS); and Babcock & Wilcock (a global clean power production firm).