Industrial park in Vietnam have become pivotal players in the nation’s remarkable economic growth story. In this article, we’ll provide you with all the essential information about industrial parks in Vietnam, such as status, specific characteristics and future outlook of these dynamic hubs of industry.
1. Status of industrial park in Vietnam
According to the development plan for industrial parks in Vietnam, in 2023, there were 397 new IPs established with a total land area of 122,900 hectares. This brought the total number of IPs in Vietnam to 620. These IPs have successfully attracted thousands of projects from 65 countries and territories.
The average investment attraction rate for these IPs reached 4.61 million USD per hectare, with a high occupancy rate of over 80%. Specifically, the northern region and the southern region recorded occupancy rates of 81% and 92%, respectively.
Below is a summarized list of the total number of industrial parks (including those already in operation and those under planning and development) in the three key economic regions of Vietnam:
| Region | Number of Industrial park in Vietnam | Occupancy rate |
|---|---|---|
| Northern | 248 | 81% |
| Central Region | 170 | 67% |
| Southern | 202 | 92% |
| Total | 620 | 82.4%
(510/620) |
(*) According to CBRE’s 2023 report
1 – Northern region:
The key economic area in the North is becoming a shining star in the market as it consistently attracts FDI from major conglomerates such as Samsung, LG Electronics, and Vinfast, particularly in sectors like electronics, computers, automobile manufacturing, machinery, equipment, and solar energy.
In 2023, the northern region saw the establishment of 68 new industrial park projects, attracting a total investment of over 17.3 billion USD, accounting for 67% of the country’s total FDI. Among these, Bac Giang (1.06 billion USD) and Bac Ninh (486 million USD) secured the first and third positions in attracting new registered FDI in the country, respectively.
2 – Central Region:
Meanwhile, the central region has rapidly emerged as a new hotspot in the industrial park real estate sector in Vietnam. Nghe An, with an FDI capital of 1.2 billion USD, made it into the country’s top 10 and stands out as the leading province in attracting FDI in the Central Region. Additionally, several other provinces and cities, including Ninh Thuan, Quang Ngai, and Quang Nam, are swiftly entering the race with enticing incentives to attract both domestic and foreign investors.
With the advantage of abundant vacant land, a plentiful labor force, and government support in terms of policies, the industrial land market in the Central Region is expected to continue its robust growth in the coming years.
3 – Southern Region:
The key economic area in the South secured the second position with 122 new industrial park projects and an impressive FDI influx of 1.4 billion USD. In the past, this region was renowned for its exceptional FDI attraction capabilities. However, its rapid development has led to an average primary rent price reaching USD 159/m2/lease cycle, which is 42% higher than the Northern key economic region’s rate of USD 112/m2/lease cycle (*).
(*) According to the Cushman & Wakefield Vietnam report on the cost competitiveness of industrial parks in the Northern and Southern regions.
Nonetheless, this region is expected to experience a significant boost in the industrial park real estate market, with a series of transportation infrastructure projects nearing completion. These projects include the Ben Luc – Long Thanh expressway, the Long Thanh International Airport project, and Terminal 3 of Tan Son Nhat International Airport.
2. Specific characteristics of Industrial park in Vietnam
Industrial parks in Vietnam boast several distinctive features that make them attractive destinations for businesses, including:
- Strategic locations: Industrial parks often situated in close proximity to major cities and transportation hubs, which facilitates efficient supply chain management. Additionally, these parks offer excellent accessibility to ports and airports, ensuring seamless import and export activities.
- Infrastructure facilities: Industrial parks stand out for their top-notch infrastructure facilities, featuring modern amenities and reliable utilities such as water, electricity, and gas. This infrastructure support helps businesses operate smoothly and sustainably.
- Size and zoning: Industrial parks come in a variety of sizes, accommodating various industries and not restricting activities through zoning regulations.
- Government support and policies: Businesses investing industrial in Vietnam parks can enjoy investment incentives and tax benefits, which can substantially reduce operational costs. Moreover, Vietnam’s regulatory framework is favorable to foreign enterprises, providing a conducive environment for their growth and success.
3. Types of Industrial parks in Vietnam
Vietnam offers a diverse types of industrial parks tailored to meet various business needs, including:
- Export Processing Zones (EPZs): Export Processing Zones (EPZs) are specifically designed to produce goods for export. These zones are designated areas within a country that are established to promote and facilitate export-oriented industrialization.
- High-Tech Parks: These specialized industrial zones place a strong emphasis on fostering cutting-edge technology and promoting innovation. High-Tech Parks provide an ideal environment for research and development activities, attracting businesses and organizations looking to push the boundaries of technology.
- Eco-Industrial Parks: These specialized zones prioritize ecological responsibility and the integration of green technologies. With a strong commitment to environmental protection and sustainability, Eco-Industrial Parks aim to minimize their carbon footprint and reduce the environmental impact of industrial activities.
- Mixed-Use Industrial Parks: These parks are characterized by their unique blend, where manufacturing, residential, and commercial zones seamlessly integrate, creating a holistic ecosystem. Businesses across various sectors coexist and collaborate within these parks, fostering synergies and opportunities for cross-industry partnerships.
- Specialized Industrial Zones: These zones are meticulously designed to cater to the unique requirements of specific industries, such as automotive and electronics. These zones are precision-engineered to provide customized infrastructure and support that align with the specialized needs of the targeted sectors.
4. Price and incentives of Viet Nam industrial park
Vietnam’s industrial park leasing prices are set for slight increases in the near term. Despite approval for 9 new industrial parks in 2022, covering 2,472 hectares with 29.4 trillion VND in investment, 2023 is expected to see limited supply due to challenges in site clearance, difficulties in converting land, and stricter land conversion controls.
The rental prices for industrial park land in Vietnam varied as of December 2023, ranging from USD 90 – 225/m2/lease cycle, approximately equivalent to 2,000,000 to 6,000,000 VND per square meter per lease cycle. Specifically, the average land rental prices in key economic regions were as follows:
- Northern Region: USD 131/m2/lease cycle.
- Central Region: USD 38 – 50/m2/lease cycle.
- Southern Region: The highest among the three regions, with an average land rental price of USD 189/m2/lease cycle.
Land prices in the South are forecasted to rise by 1-2%, with a similar trend expected in the North. Net profits for listed industrial park developers are estimated to grow by around 12% in 2023, driven by increased leased land and anticipated rental rate hikes of 3% in the South and 2% in the North.
The Vietnamese government has implemented various tax incentives to attract investors to lease land in industrial parks. These incentives include exemptions or reductions in land rental taxes and fees:
- According to decision 25/2023/QĐ-TTg, the state offers a 30% reduction in land rental fees for businesses leasing land directly on an annual payment method (this does not apply to projects that already have land tax exemption).
- Investors can also benefit from extensions in tax and land rental fee payment deadlines, aligning with their specific circumstances as specified in Decree 12/2023/NĐ-CP.
These financial support measures are part of the government’s efforts to stimulate economic growth and create a conducive environment for industrial park businesses in industrial park in Vietnam.
5. Industrial park in Vietnam: Opportunities and challenges
Opportunities:
Vietnam’s industrial parks present abundant opportunities for investors. The government’s diverse range of incentives underscores its commitment to fostering remarkable development, with industrial real estate being a priority area.
While major cities like Ho Chi Minh City have seen significant growth and limited available land, there are ample opportunities in nearby provinces like Ninh Thuan that are just beginning to develop industrial real estate, offering abundant vacant land and government investment focus.
Furthermore, the region boasts lower investment costs compared to the broader market, making it an attractive option for businesses looking to establish a presence. Additionally, the northern and central regions of Vietnam have a substantial inventory of vacant land, creating numerous investment prospects, as the low occupancy rates open the door to various opportunities for investors.
Challenges
Investing in Vietnam’s industrial parks does come with its share of challenges. One significant challenge is the shortage of high-quality labor, which can affect the productivity and efficiency of businesses operating within these parks. Additionally, navigating administrative procedures in Vietnam can be cumbersome and time-consuming, posing obstacles to investors seeking a streamlined process.
However, the Vietnamese government has recognized these challenges and has taken steps to address them. They have implemented various solutions, which will be further analyzed in the following section. These solutions aim to improve the labor force, enhance administrative efficiency, and create a more favorable environment for both domestic and foreign investors in the industrial park sector.
6. Future outlook of industrial park in Vietnam
Vietnam’s industrial park sector is poised for growth, supported by the government’s strategic development plan. With a focus on modernization, skilled labor, and technology transfer, the plan prioritizes key sectors like manufacturing, electronics, and renewable energy. It seeks to shift from quantity-based growth to quality and efficiency-driven development, promoting high-value-added products and global integration.
The plan also envisions rational spatial distribution, enhancing inter-industry and inter-regional linkages. By 2035, Vietnam aims for a green, technologically advanced industrial sector, producing internationally competitive products and deeply integrated into global value chains. This forward-looking strategy sets a positive trajectory for the future of industrial parks in Vietnam, promoting sustainable growth and global competitiveness.
Industrial park in Vietnam offer a dynamic environment for domestic and international investors. The future outlook for these industrial parks is bright, as Vietnam continues its journey towards modernization, sustainability, and global competitiveness.
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