Industrial land rents in Ho Chi Minh City have reached a new high of $198 per square meter per term, outpacing all other cities with a 90 percent occupancy rate.

It was followed by Hanoi at $140 and Da Nang City at $80, according to a survey by consulting firm Cushman Wakefield. The average rent in the southern region is $135, whereas the average rent in the northern region is $109.

Due to multinationals' shift of manufacturing from China, northern industrial hubs are experiencing an average occupancy of 80%. The average rent in the central region is $34 per month, with a 67 percent occupancy rate.

Food processing, heavy industries, oil, energy, textiles, and footwear are the prevailing industries.

According to research by real estate firm Jones Lang LaSalle (JLL), rents in southern cities were $120 per square meter per term in the first quarter, up 9% year over year.

As the economy reopened, international corporations boosted their investment in Vietnam, causing the surge.

Colliers Vietnam stated that industrial land rents in HCMC have risen by 8-9 percent yearly in recent years, and businesses are moving to other southern cities such as Binh Duong and Long An due to a lack of space in Vietnam's main metropolis.

According to Savills Vietnam, the government is pushing multinational companies to relocate their manufacturing to Vietnam, with a focus on high-value-added industries.

Despite existing barriers that can hinder efforts of foreign investors, Vietnam's industrial real estate is predicted to be more active than ever in 2022, with limited land funds and government legislative backing. As real estate-related transactions are a complicated commodity, the parties involved must conduct extensive research and make specific strategies to assure long-term value. With an experience of more than 10 years in consulting, Viettonkin is one of the leading firms in the industry. In order to not miss out the golden time, do not hesitate to contact Viettonkin for amazing insights and guidance on this expanding market. Learn more about us and how we can help you minimize investment risk in the Vietnamese market here.

Source: VNExpress

In order to tighten the bilateral relations between Vietnam and Singapore, in 2006, Singapore’s Minister of Industry and Trade Lim Hng Kiang and his Vietnamese counterpart Truong Dinh Tuyen officially signed the Framework Agreement on Vietnam-Singapore Connectivity that covered six pivotal areas: finance, information technology, and communications, education and training, transport, investment, trade, and services. The Singapore-Vietnam Connectivity Framework is an annual platform that plays a significant part in strengthening the economic bilateral relations between the two nations. The connectivity ministerial meetings between leaders of both parties are organized on a regular basis to review the effectiveness of the Agreement and plan on future cooperation directions. 

Developments and economic results for Vietnam since the signing of SVCFA

The implementation of the Connectivity Framework has proven itself to be a success in the effort of creating an open environment full of appealing opportunities for foreign business in Vietnam. Ever since 2006, Vietnam has observed various positive trends within its economic market.

Vietnam FDI since the signing of SVCFA

Over the past decades, Singapore has consistently invested in Vietnam. In 2016, Singapore was the third-largest source of FDI into Vietnam, accounting for 9.9 percent at US$37.9 billion over 1,786. Key sectors included real estate and construction, as well as, manufacturing, especially in textiles and garments. 2017 saw a remarkable rise from 1,786 to 1,800 projects with a cumulative investment of USD43.2 billion, approximately USD10 billion more than the previous year.  

In 2020, the foreign direct investment (FDI) from Singapore accounted for one-third of Vietnam’s total foreign investment with nearly USD9 billion, majorly in sectors such as manufacturing, consumer services, hospitality, food processing, infrastructure, real estate, high-tech manufacturing, finance, and technology. By the first four months of 2021, Singapore has managed to become the largest foreign investor in Vietnam with a total investment of over USD4.8 billion, taking up nearly 39.6 percent of the total foreign investment in Vietnam. 

A highlight of the positive economic results of the signing of the Singapore-Vietnam Connectivity Framework Agreement is the construction of the seven Vietnam-Singapore Industrial Parks. Over the last 14 years, there have been 7 construction of the Vietnam-Singapore industrial parks: VSIP 1 and VSIP 2 in Binh Duong, VSIP 3 in Bac Ninh (12/2007), VSIP 4 in Hai Phong (01/2010); VSIP 5 in Quang Ngai (9/2013); VSIP 6 in Hai Duong (8/2015) and VSIP 7 in Nghe An (9/2015).

VSIP has developed a total of 9 projects across the country with a total investment of USD 15 billion of investment capital from tenants, as well as supplied production infrastructure for 880 partners from more than 30 countries and territories and created job opportunities for more than 250,000 workers. More than 600 Singapore companies involving food manufacturing, chemicals, and precision engineering have a presence in these parks.  VSIP also set out a goal to further develop the field of Industrial  – Service – Urban Complexes.

Trade

Before the signing of the SVCFA, the two-way trade value was about USD6.4 billion. After the implementation of the Connectivity Framework Agreement, bilateral trade values have steadily increased year on year, which rose to a value of USD 15.8 billion in 2012. Until 2016 and 2017, the value attained at USD 19.8 billion and USD 21.6 billion, respectively, made Singapore Vietnam’s sixth-largest trading partner and Vietnam Singapore’s 12th largest trading partner. The highest growth rate commodities in trade are electrical, electronic equipment, Mineral fuels, oils, distillation products, grease, leathers, tobaccos, glass products, seafood, and vegetables.

Conclusion

The signing of SVCFA has undisputedly fostered an advantageous environment with more investment opportunities in Vietnam for Singaporean business. The SVCFA has displayed its effectiveness in boosting the potentiality of the Vietnam market. In the future, there will inevitably be further positive outcomes from the agreement; thus consolidating the intimate bilateral economic relations between Vietnam and Singapore.

If you are foreign investors and businessmen who seek investment opportunities in Vietnam or in Singapore-Vietnam Industrial Parks in particular, please contact Viettonkin consultant team via email or contact page to get support. With our specialized knowledge and experience in helping foreign enterprises’ getting into the Vietnamese business environment fruitfully and economically, we can provide detailed advice on procedures, stages, and documents required to prepare for the application of a Vietnam business registration certificate.

Vietnam and Singapore established diplomatic relations on August 1, 1973, but since Vietnam officially joined ASEAN in 1995, bilateral relations have advanced at a high speed. In particular, the two countries signed the Singapore-Vietnam Connectivity Framework Agreement (SVCFA) on 23 January 2006, creating a legal basis and favorable conditions for the two sides to boost bilateral friendly relations and multifaceted cooperation. Six sectors the SVCFA covers include education and training, finance and investments, information technology and telecommunications, commerce and services, and transportation. The Connectivity Ministerial Meetings are now held annually and are co-chaired by Singapore’s Minister of Trade and Industry and Vietnam’s Minister of Planning and Investment. 

Development of Singapore-Vietnam relations since the signing of SVCFA

Since its establishment, the Connectivity Framework has made significant progress in building a favorable climate for Singapore enterprises to invest in Vietnam. Throughout the years, Singapore companies have persistently invested in Vietnam. With over 2,000 valid projects valued at approximately $50 billion, Singapore is currently Vietnam’s largest investor within ASEAN, and the third-largest worldwide, coming in behind Japan and South Korea. 

The nine Vietnam-Singapore Industrial Parks (VSIP), located in Binh Duong, Hai Phong, Bac Ninh, Quang Ngai, Hai Duong, and Nghe An, demonstrate the two nations' strong economic collaboration. Recognized as one of the leading industrial parks in Vietnam, VSIP is an attractive investment destination for enterprises looking to target both the domestic and export markets in Vietnam. VSIP has drawn over $15 billion in investments over the years, with 880 enterprises employing over 300,000 people, demonstrating the success of the jointly created industrial parks.  

Bilateral ties between the two countries, which are excellent and multi-faceted, were elevated to that of a Strategic Partnership in 2013. Vietnam is Singapore's sixth-largest trading partner, whereas Singapore is Vietnam's 12th-largest trading partner. Iron and steel products, grease, leathers, tobaccos, glass goods, seafood, and vegetables are among the commodities that have seen the highest growth in trade. In 2019, bilateral trade between the two neighbors has steadily grown to reach $22.7 billion.

In terms of defense cooperation, Vietnam and Singapore signed a defense cooperation memorandum of understanding in September 2009. Exchange visits between the two nations' defense ministers, annual defense policy dialogues at the deputy-defense-ministerial level, and meetings of joint working groups have all helped to strengthen bilateral defense relationships. In September 2013, the two sides also announced an agreement on exchanging non-military maritime information and a deal on submarine rescue.

Additionally, Vietnam and Singapore bolster cooperation in human resource development with many technical support and training courses. More than 17,000 Vietnamese officials have attended courses under the Singapore Cooperation Programme in areas such as healthcare, environment, finance and trade, productivity, public administration, and English language training. 

Vietnam's expectation of the Singapore-Vietnam Connectivity Framework Agreement (SVCFA) in the new decade

Continue promoting the Vietnam – Singapore strategic partnership

On 16  April 2021, Foreign Minister Bui Thanh Son spoke by phone with his Singaporean counterpart Vivian Balakrishnan, and the two made an agreement to strengthen the Vietnam-Singapore partnership. They agreed on a number of concrete steps including increasing all-level mutual visits and meetings through all channels to advance Vietnam-Singapore cooperation in the time ahead while maintaining and effectively putting bilateral cooperation and consultation mechanisms in place.

During a reception for the newly-appointed Singaporean Ambassador to Vietnam Jaya Ratnam on May 26, Deputy Prime Minister Pham Binh Minh expressed his delight at the successful growth of bilateral relations across fields despite the health crisis. The Deputy Prime Minister has proposed that Singapore and Vietnam work closely together and help each other in responding to the COVID-19 pandemic and obtaining safe and efficient vaccinations. To facilitate these growing trade and commercial ties, Vietnam and Singapore discussed how to safely and progressively restore borders for critical business travel.

Besides, he expressed his hope that the 15th Vietnam-Singapore Connectivity Ministerial Meeting will be organized in 2021. In the face of complex developments and growing trade frictions in the region and around the world, the two sides will keep working to enhance the connectivity of the two economies and boost coordination in strategic issues at multilateral forums, especially at ASEAN and the UN to actively contribute to the solidarity and centrality of ASEAN. 

The two officials agreed that the VSIP model is a bright light in economic relationships and that economic cooperation is a crucial pillar of the bilateral relationship between Vietnam and Singapore. Regardless of the Singapore-Vietnam Strategic Partnership, Vietnam expected to increase cooperation in non-economic sectors such as militaries, counter-terrorism, piracy, human trafficking, and money laundering. In addition, the Deputy PM wished that an increasing number of Vietnamese students would pursue their studies in Singapore’s high standard of education, thereby improving the quality of Vietnam's human resources.

Expand cooperation and increase in investments from Singapore in new sectors 

Deputy Prime Minister Pham Binh Minh stressed the importance of the two sides cooperating to review and promote all-around cooperation within the framework of the Vietnam-Singapore Economic Connectivity Agreement during his discussion with Jaya Ratnam.

Despite the outbreak, Singapore has become Vietnam's leading investor, which is seen as a significant milestone in the two nations' relationship. As a result, the Deputy Prime Minister stated the intention of attracting more Foreign Direct Investment in Vietnam from Singaporean enterprises to help the country achieve its socio-economic development goals for 2021 and beyond. 

Vietnam, like many other nations across the world, is beginning to explore the concept of Smart Cities, with Hanoi, Ho Chi Minh City, and Da Nang joining the ASEAN Smart Cities Network. It is anticipated that, with the support of Singapore, Vietnam will make these cities smarter, greener, and more livable, while preserving their rich heritage and culture. Singaporean technology companies are encouraged to invest in the Vietnam market, allowing Singapore to retain its leading investment position in Vietnam, particularly in priority spheres such as infrastructure development, smart cities, information technology, and startups.

The Vietnam-Singapore strategic partnership has seen positive developments and brought fruitful results to both nations over the years. There is no doubt that SVCFA will substantially deepen cooperation and tighten strong ties between Vietnam and Singapore in many areas. Despite any differences and challenges the two nations may have, both sides continue to focus on building a win-win relationship and aiming towards peace and development in the region in the new decade.  

If you are Singaporean investors who need support with setting up a company in Vietnam, please contact Viettonkin consultant team via email or contact page. With our specialized knowledge and experience in helping foreign enterprises’ getting into the Vietnamese business environment, we can provide detailed advice on procedures, stages, and documents required to prepare for the application of a Vietnam business registration certificate.

Whether you are eyeing Vietnam as your next FDI destination or in the process of market research, choosing a location to set up business in Vietnam is no simple task in this vast country. Luckily for investors having Vietnam on their list of business locations, there are various industrial zones in key economic regions designated by the government to encourage FDI inflow into the country. This article will provide a broad picture of strategic business locations and major FDI hubs in Vietnam to help ease the process of choosing a business as well as set up business in Vietnam location for foreign investors.

Choosing locations in Vietnam Industrial Zones

Industrial zones are specific areas earmarked by the government for the production of goods and services. Industries are usually concentrated in certain industrial zones, which provide incentives for businesses that set up there. Industrial zones are popular investment locations for FDI into Vietnam. As of 2018, according to Vietnam briefing reports, there are 328 industrial zones countrywide, 249 of which are in operation. By the end of 2018, industrial and economic zones had attracted 7,500 domestic projects worth US$41.75 billion and around 8,000 foreign projects with a total capital over US$145 billion.

While industrial zones are convenient go-to locations for foreign businesses to set up business in Vietnam, investors should take time to narrow down their list of potential places to visit. Below is an overview of the characteristics of Vietnam’s key economic regions.

ALSO READ: How to set up a foreign owned company in Vietnam

The North

Vietnam's key economic regions in the North include the provinces of Hanoi, Hai Phong, Quang Ninh, Hung Yen, Hai Duong, Bac Ninh and Vinh Phuc. These provinces together account for 16.2 percent of Vietnam’s population and 4.7 percent of its landmass.

Vietnam’s Northern key economic regions are the hub for enterprises looking to supplement its existing manufacturing in China with lower labor costs while maintaining a strategic location of close proximity to China. 

Advantage

The influx of investment in heavy manufacturing and petrochemicals into the northern regions lead to concentrated talent and infrastructure suited to this business-line. The resulting talent pool can be one of the considerations for investors assessing business locations in this region.Cities such as Hanoi and Hai Phong have ample supplies of qualified workers and institutions that provide for specialized labor.  

Disadvantage

Due to the area’s primary focus on heavy manufacturing, investors in heavy manufacturing will find the concentration of infrastructure and talent work to their advantage while investors in other sectors, such as IT, do not benefit from these networks. Land availability is also a growing concern in Northern Vietnam compared to other locations within the country. It is important for investors to explore rent or purchase options before setting up operations in the North. 

The Central

Vietnam’s central key economic  regions include Da Nang, Thua Thien Hue, Quang Nam, Quang Ngai, and Binh Dinh.The region accounts for 7 percent of the national population

Advantage

Investment environment is less competitive than the fully explored hubs in the north and the south. In recent years, the city of Da Nang emerges as a hub of seafood, food processing, and manufacturing. In addition to production, Da Nang also benefits from a greater degree of urban planning and development due to private partnerships between governmental authorities and investors. This may create downstream benefits for FDI in the region.  See more below: Top cities to start your business in Vietnam

Disadvantage

Talent pool in the Central is more limited than in other regions. Workers in technical fields often find greater opportunities in North or South Vietnam and are likely to leave the region. However, many Vietnamese appreciate the quality of life in Da Nang and are likely to relocate if offered an attractive opportunity. 

The South

The Southern economic regions encompass the provinces of Binh Duong, Binh Phuc, Long An, Ho Chi Minh City, Tay Ninh, Dong Nai. Vietnam southern regions attract the most FDI projects according to Vietnam Briefing, with 793 projects listed in 2017. 

Advantage

The region is economically diversified, suitable for small and medium sized enterprises. Businesses from more niche sectors are likely to find the South a more suitable investing location than other regions. Given the availability of various institutions that provide for the workforce, in recent years Ho Chi Minh city has emerged as a major hub for startups. 

Its large population also makes consumption another advantage of the region. Investors seeking to establish brand identity with Vietnamese consumers are likely to find opportunities in the South. 

Disadvantage 

Vietnam Southern economic regions lack the strategic proximity to China. Thus, investors ith time sensitive production chains would find the Northern region more suitable. Although the talent pool is available and diverse in Southern Vietnam, competition is high between employers. 

Narrowing down your list of potential business locations in Vietnam

In considering where to locate operations of a foreign invested enterprise, investors should take into account: industry specialization, labor, infrastructure, and tax incentives. 

Industry specialization

Finding an industrial zone specializing in similar or parallel industries is important for foreign investors seeking to utilize the benefits available in the zone. Infrastructure and other facilities are often tailored to the needs of the industries. Investors in these industries are likely to benefit from these specialized facilities and infrastructure networks. 

Labor

The clustering of talent is also influenced by the concentration of industries in specific zones. Jobseekers often relocate to industrial izones due to the concentration of employment opportunities. Certain large industrial zones also include institutions to provide a steady stream of talent. Choosing a zone that specializes in the industry will better guarantee the supply of talent in the field. This is especially true of the Central industrial zones, where talent pool is limited and finding skilled labor for niche industries poses a challenge. 

Infrastructure

Infrastructure remains a constraint on FDI in Vietnam, which can suffer from lagging access to utilities, inputs, and transport networks necessary for operations. Infrastructure deficits can delay global value chains. Tax incentives and the availability of infrastructure offered by industrial zones provide a solution, assisting companies in a range of operational areas. 

Proximity to ports, key road networks, and rail systems offers another significant asset to businesses. Industrial zones are usually located adjacent to a port or attached to an existing port complex. Some zones are directly linked to key roads and railway networks  that reduce the time of transporting goods in and out of the country. 

Incentives

Preferential tax rates are available to investors located in industrial zones in Vietnam. Other indirect taxes, such as Value Added or Special Consumption Tax, may also be reduced on a good-by-good basis. These tax incentives can help offset the higher wages and rental fees in these areas.

Top cities to start your business

Ho Chi Minh City

Being the central economic hub of Vietnam, it is no surprise that Ho Chi Minh City is first on the list of FDI attractions. One of Ho Chi Minh City’s competitive advantages is its available infrastructure and transportation networks. Tan Son Nhat International Airport is the biggest airport in Vietnam, accommodating up to 17 million passengers per annum. Saigot port network is also one of the major commercial ports in Vietnam. Ho Chi Minh City has 11 industrial zones with a total area of more 1,700 hectares, and more than half of them have land available for rent. The city also houses many institutions, research centers, and think tanks, guaranteeing a constant supply of high-skilled labour

Hanoi

Hanoi is an appealing FDI location for its extensive transportation network and investment incentives from the government. Hoa Lac Hi-tech Park in Hanoi is the first Hi-tech Park in Vietnam to receive special mechanisms and incentive policies, allowing investors and companies investing in Hoa Lac Hi-tech Park to enjoy preferential tax rates and other support, and Noi Bai International Airport is the second biggest airport in VIetnam. Regarding FDI inflows, Hanoi ranked fourth among cities and provinces in Vietnam with more than 4,489 projects in force and $27 billion in registered capital.

Phu Quoc

Foreign investors benefit from the favourable real estate market, liberalised foreign policies, international airport, seaport system, road traffic and good infrastructure in Phu Quoc. 

As of April 2017, Prime Minister Nguyen Xuan Phuc has officially approved the plan to set up a Special Economic Zone. The new development model will allow 100% foreign ownership of properties and rights to conduct trading activities related to tourism. Investors can also mortgage real estate at international banks that have local branches for a loan. It is expected that Phu Quoc Special economic zone will catch up with Singapore and Hong Kong as a knowledge-based economy in 20 years.

Bac Ninh 

Bac Ninh province has grown from an agricultural community to a major industrial center with multinational companies in the Northern Key Economic Zone.

Thanks to its proximity to Hanoi and China, Bac Ninh has become the second most attractive option for FDI in Vietnam. Its total GRDP (Gross Regional Domestic Product) in 2017 increased by 19% compared to the previous year – becoming the second highest per capita income of the country.

Binh Duong

Binh Duong province, located in the southern key economic region, has become a rising investing zone in recent years. Its close proximity to Ho Chi Minh City has attracted large foreign companies that seek to expand their production as part of their supply chain while taking advantage of the available land. On top of that, Binh Duong focuses on attracting investments in hi-tech, less labour-intensive, and environmentally friendly industries.

Da Nang

The city is only hours away from big domestic and foreign markets such as Hanoi, Ho Chi Minh, China, India, etc. The East-West Economic Corridor passing through Danang links the city with other neighboring countries such as Laos, Cambodia, Thailand, and Myanmar with Danang Port acting as the access point to the Pacific Ocean, facilitating the transportation of goods and people through the area. As a rising modern city Da Nang also boasts high-standard infrastructure. The city has 06 industrial zones in operation and 03 more under planning. Danang Hi-tech Park also has more than 300 hectares of land available for rent with attractive rental rates and other supports.

Hai Phong

Being the biggest port and one of the major industrial hubs in the country, Hai Phong is an excellent place to start your business. In 2016, Hai Phong was leading the foreign direct investment in the country with a total investment capital of US$2.8 billion.

Above are the key insights that help you map out potential business locations in Vietnam. Indeed, their are many other factors individual to the business that should go into the decision of location. Our Viettonkin experts team with their long-established experience in FDI in Vietnam are ready to assist.