Business Relocation To Vietnam

Since the implementation of the open-door (Doi Moi) policy in 1986, the government of Vietnam has been encouraging foreign investments into the country by creating a favorable legal environment (Foreign Investment Law 1988) and infrastructure. If in 1986 there were around 335 hectares dedicated to industrial parks, today Vietnam boasts 80,000 hectares.

Industrial Parks (IPs), Economic Zones (EZs) and Export Processing Zones (EPZs) have made the essential contribution to attracting investment, creating jobs and improving the economic growth of Vietnam for the past 32 years.

According to Decree 82, an industrial park is an area with a defined geographical boundary, specializing in the production of industrial goods and services for industrial production. It includes export processing zones, supporting industrial parks, and eco-industrial parks.

In 2017, the government planned to open three special economic zones which are the Northern, Central and Southern key economic zones. The number of industrial parks in Vietnam continues to rise as foreign investment pours in.

According to the latest news from Ministry of Planning and Investment of Vietnam (MPI), by the end of June 2018, there were 325 industrial zones established nationwide with a total natural land area of nearly 95 thousand hectares.

South Korea is one of the biggest investors, especially with the case of Samsung that has reportedly invested over 17 billion of dollars into Vietnam; Taiwan and Japan are the following. Moreover, under the circumstances of US- China trade war, there is a number of interested manufacturing companies looking to relocate their productions into Vietnam and, as a consequence of this, there has been an increase in the industrial property market demand and supply in Vietnam including industrial lands, ready-built factories, warehouses, and logistics properties.

Northern industrial parks in Vietnam:

The North key economic zone is made up of seven cities and provinces which are Hanoi, Hai Phong, Bac Ninh (where the first Samsung factory located), Hai Duong, Hung Yen, Vinh Phuc and Quang Ninh. The majority of industrial parks are developed by local groups and developers; There are a few selected foreign developers in the region such as VSIP (Vietnam Singapore Industrial Park), Thuan Thanh 2 (Taiwan) or Nomura (Japan).

The economic triangle of Hanoi – Hai Phong – Quang Ninh is one of the key economic zones of the country. Hai Phong is considered a transportation hub of the northern coast where there is a deep-sea port that helps sea transportation advantaged.

Computers, Electronic and Optical Products’ are the more common occupiers with 25%, then there are ‘Machinery and Equipment with 15% and ‘Fabricated metal Product’ with 12%.

Central industrial parks in Vietnam:

The Central key economic zone comprises five provinces: Thue Thien Hue, Quang Nam, Quang Ngai, Da Nang and Binh Dinh. The majority of the development activity is concentrated in Da Nang and Quang Nam.

Even though the economic zone in central area is considered at the infancy stage, there are upcoming noticeable development with both reputable local and foreign developers. For instance, Saigon Investment Group, VSIP, Ky Ha Chu Lai, Hoang Thinh Dat Group, etc.

Da Nang – located in the Southern Central Coast, has been known as one of the top tourist cities in Vietnam with an infrastructure and transportation system and a port that are giving benefits to the industrial and commercial activities.

The main industries in the region focus on light industry projects, such as food processing industry (16%), fabricated metal products and non-metallic mineral products. Furthermore, there are opportunities of cheap labor cost and good quality of infrastructure, but, however, the challenging factor is to find skilled labor workforce in this Central region.

Southern industrial parks in Vietnam:

The Southern key economic zone is leading the industrial development of the whole country.

The more common and traditional sectors of the region are rubber and plastic as well as textile and apparel industries. These are the industries that reflect the backbone of Vietnam’s core industrial market.

There are 17 cities and provinces in the South of Vietnam, 8 of which are the key economic zones. These are Ho Chi Minh city, Binh Duong, Dong Nai, Long An, Ba Ria-Vung Tau, Binh Phuoc, Tay Ninh and Tien Giang. The Southern Key Economic Zone is dedicated to the development of commerce, exports, technology, services, and telecommunications.

The majority of the industrial parks were developed by local group of developers with reputable names such as Becamex IDC, Sonadezi and Vietnam Rubber Group. Some foreign developers which are VSIP (a joint venture of Singapore and Vietnam); Amata (Thailand), for instance. The southern region centered around Ho Chi Minh city, Binh Duong and Dong Nai province, is considered the most active economic zone across the country.

The opportunities of the southern economic zones come from several factors such as a developed transport infrastructure network with full transportation by sea, railway, road and air way; numerous modern facilities and especially well-trained labor workforce; above all of this the South is considered the most favorable destination for new brands to penetrate Vietnam market thanks to Ho Chi Minh City, the country’s largest city.

The key occupiers by sectors in the industrial parks of Southern Vietnam are ‘Machinery and Equipment’, ‘Textile and apparel’, ‘Fabricated Metal Product’, ‘Rubber & plastic’ ‘Chemicals – Chemical products’ and “Food Processing’.

For a foreign investor there are several factors that must be considered in order to decide where to locate operations, such as the geographic location, land, labor, infrastructure, industry, business environment and incentives. Foreign investors looking to establish operations in an industrial park should also consider the types of industries already existing in the area to understand the potential benefits to their own operations. For instance, it would be difficult for a low-end manufacturing company to minimize labor costs in an area with many hi-tech firms.

Fidinam is present in Vietnam with a network of local partners and industrial parks such as Becamex IDC, VSIP, Long Hau IP, etc.

We are able to assist the client from the researching to the visiting and decision-making stage ensuring that our investor can select the most suitable industrial park to locate their operation.

There has been a substantial demand and request from Europe, China and Hong Kong to relocate the productions and manufacturing facilities to Vietnam and it is undeniable that this is the strategic time to start investing into Vietnam for a number of foreign investors from diversified product segments and industries.

Tu Nguyen, Business Developer at Fidinam HCMC

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