Industrial land supply a fillip for investors
Industrial land supply a fillip for investors
Vietnam is facing opportunities to attract a new wave of investment from foreign corporations thanks in part to improving supply of suitable land.
In early July, Amata Long Thanh Urban JSC started construction of its Long Thanh high-tech park in the southern province of Dong Nai, with a total investment of $282 million.
The facility covers 410 hectares, aiming to entice modern manufacturing industries, and is expected to create additional tech-based value while contributing to the socioeconomic development of local communities.
The total infrastructure investment in the first phase stands at around $39.8 million, and is divided into two phases to be completed in October and the second quarter of 2024.
Meanwhile, Suntory Pepsico Vietnam Beverage in July announced its latest factory in Huu Thanh IDICO Industrial Zone, with a total capital amount of $185 million. Located in the southern province of Long An, it will be put into operation by 2026. The 20ha plant in Huu Thanh Industrial Park (IP) will have an annual output of 796 million litres of products, including purified water, milk, and other beverages.
Huu Thanh IP, invested by IDICO Corporation, which has attracted 35 investors with many notable names such as Suntory Pepsico, FPT Retail, Cuu Long Pharmaceutical, and Messer Industrial Gas, with occupancy as of June at about 26 per cent.
Nguyen Dinh Nam, founder and general director of Vietnam Investment Cooperation and Promotion JSC, said that compared to other countries in Southeast Asia, Vietnam currently had the advantage of geographical location and low input costs.
However, in the next 3-5 years, the trend of rapidly increasing labour and land prices will make these advantages gradually lose their competitiveness, so focusing on developing supporting industries and supply chains is a vital way for further development.
“Investors are currently utilising these advantages to optimise profits, but new IPs need to focus on investment in transport infrastructure and supply chain connectivity to increase investment efficiency,” Nam said.
The amount of foreign capital flowing is causing the demand for IPs to increase.
As of mid-July, the total newly registered capital, adjusted and contributed capital to buy shares and buy capital from foreign investors reached around $16.24 billion, according to the Ministry of Planning and Investment. Of those, around 1,630 new projects were granted approval with the total registered capital reaching nearly $7.94 billion, increasing 75 per cent in terms of investment and 39 per cent in capital over the same period last year.
Vietnamese IPs are still attractive addresses for foreign investors when coming to Vietnam. According to a report on the industrial real estate market in the southern key economic region released by Cushman & Wakefield in June, the demand for related rental is continuing to increase, despite some economic difficulties.
“Despite the slowdown in global economic growth, the market still recorded a lot of demand for IP land in the south, with a net absorption of more than 70ha, new projects, and capital increases. These deals have helped keep occupancy rates stable at just over 80 per cent,” read the report.
The report also released that no new IP supply may be recorded in the second half of 2023, but 2024 will welcome about 1,800ha of new industrial land area, concentrated in Binh Duong, Dong Nai, and Long An provinces.
“The future supply of industrial land will increase significantly, with an estimated 5,250ha in 2026, after local authorities complete the adjustment of the master plan and development orientation of the provinces,” it said.
