BW Industrial setting the market standard
BW Industrial setting the market standard
Established in 2018 by a joint venture between Warburg Pincus and Becamex IDC, BW Industrial Development JSC has become the largest and fastest-growing logistics and industrial for-rent platform in Vietnam. Lance Li, CEO of BW Industrial Development JSC, talked with VIR’s Bich Ngoc about his assessment of the development of the market.
What difficulties has BW Industrial Development encountered when attracting manufacturers to its campus?
The leasing part is always difficult. Despite being a leading player in this market, a large proportion of our tenants, especially manufacturers, is small- and medium-sized enterprises (SMEs). The average space that they need is 3,000-5,000 square metres.
If you look at our tenant profile, we have more than 200 tenants. Therefore, we actually need a very strong leasing team to work with, to serve the different requirements of these tenants – from choosing the right locations to other demands such as facilities, dealing with local authorities and skilled labour recruitment as well.
Do you have any incentives for SMEs and what are the advantages for them?
For each individual industrial zone, they may have some incentive policies. In the very early stage, we will introduce that policy to our tenants, depending on each industrial park and each development authority. They have their preferences in terms of land and environmental requirements. At the very beginning, we need to understand what kind of industry is allowed, encouraged, limited, and forbidden to guide clients.
I think by now, most foreign-invested enterprises that come to Vietnam get to know us thanks to our market leader position. Another advantage is that we have a footprint all over Vietnam. I believe that we always have property that can provide what they require, both service and infrastructure to establish their factories and facilities.
We also have fully equipped multi-lingual staff who can help clients to start their businesses. I believe that our tenants, when they first come to Vietnam, are looking for people who can provide a solution for them. And we are the people who can do this task with the highest efficiency.
How do you assess the recent wave of investment in industrial property in Vietnam?
I think this is definitely a good thing. Good pandemic control has attracted investors from both existing and newer markets, especially if you look at the figures Q1 performance in terms of the national economy. It is positive and so many investors have been coming to Vietnam to set up their manufacturing basements. All of those are transferring their supply chain partially or entirely to Vietnam.
You can also see that the Vietnamese prime minister’s visits to the United States have been fruitful. Vietnam is now attractive to many foreign investors and I believe that more and more investment will be coming. Moreover, more investors coming to Vietnam presents more competition for us. From our point of view, we welcome competition which makes the market more healthy and more sustainable.
BW Industrial Development JSC, established in May 2018, is a joint venture between Warburg Pincus, a leading private equity investor in Vietnam and the largest renewables investor in Asia; and Becamex IDC, a pioneering developer of large-scale industrial townships in key markets across Vietnam.
BW has focused on developing modern warehouses and light industries to capture the outsized growth driven by the transformative shift of manufacturing bases to Vietnam, rising domestic consumption, and rapid growth of e-commerce. It has secured equity commitments in excess of $800 million from shareholders and formed strategic partnerships with top foreign-invested enterprises, e-commerce groups, and logistics players to serve one of the fastest-growing markets in Asia.
Currently, BW is Vietnam’s largest and fastest-growing logistics and industrial for-rent platform, with over 7.76 million square metres of prime industrial land under control across more than 35 projects in 26 strategic economic locations throughout Vietnam. The developer currently has a 2.2 million sq.m gross floor area of completed or under-construction properties.
What segment has the highest focus and what opportunities await BW Industrial in this wave?
Global supply chains have been significantly impacted in the past couple of years and people are now not talking about “just in time” but about “just in case”. They are redesigning and reorganising supply chains and Vietnam is in good stead during this change.
We, as infrastructure providers, should take the opportunities that arise and provide better services and solutions for these incoming foreign investors.
More and more overseas funding coming in means more opportunities for us. They will need facilities to start their manufacturing process and they need a storage system for their products. We have ready-built factories and warehouses that can meet their requirements, as well as tailor-made factories.
We also have a large land bank. Currently, we have 2.2 million sq.m gross floor area of completed or under-construction properties. This system can meet all the requirements of tenants.
There is a trend to shift warehouse systems to satellite or suburban areas. Do you have any special activities in line with this increasing trend?
I think there are two kinds of moving demand. Firstly is the spill-over effect. When the warehouse in the city gets too crowded and expensive they have to move out.
Secondly, warehouse supply in the big city is getting scarce and not much space is available. This is a balance and inevitable when the economy is booming and the population will consume more things. We can see more warehouses are being built in satellite cities like Long An and Dong Nai, for example.
Moreover, for some manufacturers, they normally need warehouses located near infrastructure systems or between the manufacturer and the port.
We have secured a large land fund in Long An province and we will build high-specification, double-storey ready-built warehouses so we will be prepared to take over those kinds of demands. Warehouse demand will continue increasing, even faster than the manufacturing demand. It is the nature of the economy. When the economy is booming, so will consumption, retail, and consumption.
