Vietnam Coal Standard Research Report

INDUSTRIAL PARK INFRASTRUCTURE DEVELOPMENT REPORT - CURRENT SITUATION AND DEVELOPMENT PROSPECT 2022

In the second quarter of 2022, the country’s GDP growth is estimated to increase 7.7% compared to Q2/2021 according to the calculations of the General Statistics Office of Vietnam. This is the highest Q2 growth rate in 10 years. In the context that the world situation is still complicated with inflation shock in many countries at the beginning of 2022 and Vietnam is in the first stage of growth after the pandemic, this growth finger is really impressive, showing that the economy is getting thriving. In which, more than 39% contributed to the increase from the Industry and Construction.

In the first 6 months of 2022, IIP in Vietnam increases about 9%, of which the manufacturing industry increases the most by about 10%. The total of the IIP and the manufacturing industry in 2022 are lower than the growth rate of the same period in 2021 and only higher than the rate of 2020, almost equal to the rate of the same period in 2018. Despite maintaining the growth rate from appearing the pandemic, the world’s price fluctuations, rare materials, especially the price of materials increases highly due to Russia-Ukcraine war and China’s Zero-covid policy has restrained the growth of product output.

Industrial land for rent is the most popular and oldest developed form of industrial real estate in Industrial Parks in Vietnam. Based on a survey of 258 active industrial parks, we found that 33% of the industrial land banks are leased for less than 50 USD/m2/lease period, and 26% of industrial parks with land leasing prices from 51-70 USD/m2/lease period. Especially in 2021, there have appeared a number of industrial parks with land leasing prices of more than 200 USD/m2/lease period, mainly in the South, although it only accounts for 3%, it also shows that the land rent has increased especially in the Southern Region in the past year.

Nowadays, ready-built factories are very attractive and have an increasing scale of investment capital but mainly towards the projects with a factory scale that is not too large and complicated as well as requires high technology. High-tech ready-built factories are tending to increase in recent years because the State has supporting policies, creating momentum for the development of high-tech industrial parks. However, this ratio is not much, and the fact that currently, high-tech industrial parks in Vietnam have not fully developed yet so they have not attracted many investors. Currently, Vietnam still mainly concentrates on the heavy industry with little high technology requirement so this type of real estate has not increased too fast. The increasing need of investors as well as the focus on the quality of factories of industrial park investors currently contributes to increasing more choices for the investors when referring to the industrial park market in Vietnam.

The new industrial parks in 2022

According to our data, in the first 6 months of 2022, about 27 new industrial parks are added to the country. In which, the Northern region is added the most with 15 parks, the Southern region is 7 parks and in the Central, there are 5 parks. In both quantity and planning areas, the new industrial parks in the North account for the majority, showing that the supply of provinces in the North is ready to take over new investment capital in the next years.

Status of some investment projects for the industrial park

Real estate of newly registered FDI projects in 2021 and the first 6 months of 2022 was very developed. Whereby, we can see that the trend of warehouse rental was raising both sides in a number of projects and registered investment capital. Especially in 2022, this trend is more and more clearly expressed when the number of warehouse rentals in the first quarter of 2022 raised 132% than the fourth quarter of 2021 and raised 193% over the same period of 2021. In the second quarter of 2022, the number of warehouse rental projects also raised 100% over the same period of 2021. The scale of investment capital of warehouse rental projects was also highly raised when the total registered investment of newly registered FDI projects in 6 months of 2022 up to 93% over the same period of 2021. Meanwhile, land lease projects were, on the contrary, both numbers of projects and investment capital scale were trending decreased.

In the first 6 months of 2022, we concluded that the textile industry was the industry that had many newly registered FDI projects. After that was: Electronic, metal, logistic, footwear,v..v. As we can see, textile was the industry that got much FDI capital in all 3 domains. Especially in central and southern, this was the industry that attract the most projects. And in northern, electronic and logistic was still top industry. This is completely matched with industrial park infrastructure in 3 domains. In Southern, a long time ago, textile was very developing because this was the convergence of many big textile projects, moreover, IPs from southern had a good infrastructure and an abundant number of workers. In northern, factories and warehouse for the logistic industry was very focusing on investment. Moreover, Nothern had a lot of IPs that invested in high-tech infrastructure, import of special electronic materials from China had many advantages in terms of geographical location, and traffic infrastructure had been improved so that it can attract FDI inflows in the electronic industry.

Industrial Parks attract most newly registered FDI projects in the first 6 months of 2022

When analyzed about the top 10 IPs, we conclude that from the beginning of the year until now, the Industrial Parks selection trend of FDI investors was still leaning towards the location of IPs that are convenient in terms of geographical location. When 80% of every industry is adjacent to the route and more than 50% of them only less than 30km from the port/airport/highway.

IMPLEMENTATION REPORT OF INDUSTRIAL PROJECTS IN VIETNAM QUARTER 3/2022

In the third quarter of 2022, the country’s GDP growth reached 13.67%, the highest in the third quarter of the last 5 years (2018-2022). The industry and construction sector and services, agriculture, forestry, and fishery sector also maintained an increase compared to the same period of last years. The total value of foreign direct investment capital into Vietnam in 9 months of 2022 is about 18.75 billion USD. The total registered capital of all newly registered, adjusted and contributed capital to buy shares projects decreased by more than 15% compared to the same period of 2021 and became the lowest number in the same period of the previous years. The sharp decline in world FDI, and geopolitical and economic conflicts led to a decrease in foreign investment capital.

Implementation Situation Of Vietnam Industrial Projects Q3 2022

In the third quarter of 2022, the whole country attracted about 90 newly FDI projects in the field of processing-manufacturing and warehouse construction sector. The number of projects increased 5% compared to the same period last year. However, in term of the amount of registered investment capital, in the third quarter of this year, the total amount of registered capital was only 70% of the attracted capital in the same period of 2021. The average capital of project also decreased by 36% over the same period last year.

Based on the newly investment FDI attracted into Vietnam from the beginning of 2022 until now, we see a decrease in registered investment capital from Q2 and maintained a slight decrease in Q3 (down by 3%) but the number of projects increased (Number of projects in Q3 increase by 25% compared to Q1 and Q2). We believe that in the fourth quarter of this year, both the number of projects and the scale of investment capital may increase slightly compared to the third quarter because this is the end of the year, investors, especially Chinese investors and Vietnam’s authorities tend to complete procedures at the end of the year.

Although ready-built factory (RBF) leasing is an increasing trend in 2021, in the third quarter of 2022 we see a slight decrease in RBF for lease projects compared to the same period in 2021. The land lease projects still account for the majority of newly invested FDI projects in Vietnam in the third quarter of 2022 (accounting for 73% of the number of projects) generally.

In this Report, we focus on analyzing projects that are in the process of being prepared for construction (Project preparation, design, bidding, main contractor selection) and projects under construction based on criteria: Type of construction, locality, type of projects, type of investment in the first 3 months of 2022 updated in our data system.

In the third quarter of 2022, projects under preparation and design stages accounted for the largest number and total investment among industrial projects. Due to the continuous increase of the cost of raw materials and fuel in recent years, leading to a great impact on construction costs, and the disruption of supply chains, which makes investors afraid to invest in projects.

INVESTMENT REPORT SUPPLY CHAIN LOGISTICS INDUSTRY IN VIETNAM 10M/2022

World FDI is on a downward trend from 2017 to 2021. Since 2017, the world FDI flows have changed continuously and there has never been a year that surpassed the number recorded in 2017. In 2021, global FDI flows recorded an increase of 30% compared to 2020 due to the controlled epidemic situation in many countries around the world.

However, entering 2022, global FDI is expected to be quite gloomy compared to 2021 due to investor uncertainty and risks from supply chain disruptions plus rising raw material costs and other risks from the global political and economic conflicts. This year, the global FDI is forecasted to be flat or down compared to 2021.

According to records in 2020, the global logistics market reached the largest scale in the Asia Pacific market with a nearby 4 trillion USD in market value. The Asia-Pacific region has long been an extremely exciting market for the logistics industry due to the concentration of many manufacturing plants, dense population, and high consumer demand. Next is North America and Europe region. In 2021, the global logistics market has recovered from the Covid-19 epidemic with a market size value of 9.53 billion USD (increased 17% compared to previous year). However, with the complicated developments of the macroeconomic situation and the inflation situation, the price of raw materials and fuels is forecasted to be still high in 2022, this market will also be significantly affected.

The Viet Nam economy in 2021 has suffered a severe decline due to the Covid-19 epidemic, by 2022, the economy is recovering. GDP in the third quarter increased by 13.67% over the same period in 2021. This Quarter 3’s GDP growth is the highest growth rate in a decade.

For transportation and warehousing services, the year 2021 was affected by the Covid epidemic and the policies of closing the borders of some countries, causing a negative growth in transportation and warehousing services. By 2022, the recorded number has improved since the beginning of the year until now, the growth rate of transportation and warehousing services is always positive and continuously increasing. This is a good sign for the economy in general and the transportation and warehousing industry which is gradually recovering after a period of severe impact from the epidemic.

In the first 9 months of 2022, Vietnam’s total import and export turnover reached more than 500 billion USD. Exports in the first 9 months of 2022 are estimated to increase by 17.3% and imports increased by 13% over the same period in 2021. The import-export in 9 months of 2022 reached a positive trade balance (surplus) exceeds 6.52 billion USD. In which, the domestic economic sector had a trade deficit of 22.89 billion USD, the foreign economic sector had a trade surplus of 29.41 billion USD. The foreign economic sector is still the area that accounts for the majority of Vietnam’s export markets.

The growth rate of warehouse transport in the period from 2010 to now has tended to increase rapidly, especially in recent years, the data we have collected shows strong growth. This shows that the logistics industry is making great progress, contributing greatly to the domestic economy. The Compound Annual Growth Rate (CAGR) in the period 2010-2021 reaches 23.64% (much higher than the growth rate of GDP of the country) and has shown a bright picture of the logistics industry in the Vietnam market. In the first 9 months of 2022, the growth rate of Vietnam’s transportation and warehousing industry increased by 14.2% over the same period in 2021, although in 2022, companies in the industry faces many difficulties with decreasing orders, costs are increasing, but with the explosion of e-commerce and efforts to stabilize the macro economy of countries in the world, it will help the logistics industry continue to achieve good growth in 2022 and also in the following years.

Logistics investment supply chain in Vietnam

Logistics is a specific business. Foreign direct investment (FDI) can only invest 100% in a few areas of the industry. Therefore, it can be clearly seen that FDI capital is focusing a lot on warehousing services and freight agency services. There are very few other services. Among them, freight agency service has the most registered investment projects and warehousing service is the field that attracts the largest amount of investment capital. The amount of investment capital in the field of warehousing always accounts for a large proportion of the fields of the Logistics industry (usually accounts for about 90% of the total investment capital) and tend to increase gradually over time. In which, cold storage is one of the niche markets with great potential for development in the future when cold storage investment projects appear continuously and the investment scale also tends to increase.

Potential Logistics projects in the future

According to our data, potential projects are more concentrated in the North (accounting for about 48% of the number of projects about to be deployed). The number of projects about to be deployed in the South is not much less (41%) and only about 11% of the projects are about to be implemented in the Central region. The North and the South continue to be two exciting regions of Logistics projects in the future. Especially most of them are projects in the preparation and design stages.