Vietnam Logistics Industry Investment 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 OF ELECTRICAL EQUIPMENT MANUFACTURING INDUSTRY VIETNAM 9M/2022

The Year of 2022 is the year that the world economy suffers many negative impacts. The consequences caused by the Covid-19 epidemic, the energy and food crisis caused by the Russian – Ukraine war, which pushed up prices and inflation rate, China is still carrying out the blockade measures to prevent the epidemic, which has made the economy during the 9 months of 2022 very bleak. Facing these economic risks, most of the experts forecasts the economy cannot be recovered in the next quarter, global economic growth still has many challenges in terms of politics, epidemics, and inflation, … In that context, the latest forecast of global GDP growth in 2022 will only fluctuate between 2,4%-3,2%.

World FDI is on a downward trend from 2017 to 2021. In 2021, global FDI flows increased by 30% compared to 2020. However, in 2022, global FDI is quite gloomy compared to 2021 due to the impact of uncertainly on investor behavior, risks from supply chain disruptions and the increasing of raw material costs and other risks from political and economic conflicts in the world. Global FDI is forecasted to be flat or down compared to 2021.

China is the largest exporter of electrical equipment in 2021 with 898,9 million USD, followed by Hong Kong with 395,5 million USD. In 6 years (2016 – 2021), China has always maintained the leading position in the export market of the electrical equipment industry. Besides, in terms of import market, in the five years of 2016 – 2020, the US is the leading country in the import market of electrical equipment, but by 2021, China has surpassed and become the world’s largest importer of electrical equipment.

Viet Nam’s GDP growth in the third quarter of 2022 is estimated to increase sharply by 13.67% over the same period last year according to the General Statistics Office (GSO). This is the highest Q3 growth rate over the past decade. In the context of complicated world situation with inflation shocks in many countries at the beginning of 2022 and Vietnam is just in the early stages of post-pandemic growth, the growth figure is very impressive, showing that the economy is thriving very clearly.

In the electrical equipment industry, electric wires and cables are among the most exported products. The export value of electric wire and cable products is still showing a clear growth trend. In 9 months of 2022, the export value of this product has a slight increase compared to the same period in 2021. China and the US are two major export markets of Vietnam in this industry.

Status of investment projects in the electrical equipment industry

Investment in the electrical equipment industry showed a continuous increase before 2020 but decreased during the period of the Covid-19 epidemic, so far there is no sign of a full recovery.

In terms of total investment capital, Vietnam’s electronics industry market records 5.5 billion USD in total registered capital and 339 total projects from 2013 to present and heavily depended on the big players in the industry, especially from FDI capital sources. The good news is in 2019 and 2021 recorded many large-scale capital investment projects. The capital flow over the years has fluctuated strongly, not in a clear increasing direction like the number of projects, but in general, there is an increasing trend. Crucially, DDI capital projects in recent years tend to be more flourish, both in 100% DDI capital projects and DDI-FDI capital joint ventures.

The North attracts the largest scale of registered investment capital and the most projects among three regions, especially in the provinces and cities of the Red River Delta economic region.

In term of the scale of registered investment capital, the registered capital in the electrical equipment industry, especially in large scale projects, is mainly located in the Northern provinces over most of the years. Except in 2019, the amount of capital poured mostly into the Southern provinces. Prominent provinces are Bac Giang, Quang Ninh and Ho Chi Minh city. The Central region has a significant project as Vines factory project in Ha Tinh. In which, processing and assembly projects account for the largest amount of capital.

In terms of the number of investment projects,

The North is the region with the highest concentration of electrical equipment projects followed by the South and the projects has scattered distribution in the Central. Since the Covid-19 epidemic appeared, the number of projects has decreased sharply and there is no prospect of recovery in 2022.

Some of the provinces and cities that attract many projects in the electrical equipment industry include Binh Duong, Dong Nai, Bac Ninh, Bac Giang and Long An. We can observe that among the top 5 provinces that attract the most projects, 3 are from the South. This shows that in terms of attracting the number of investment projects, there is not a clear distinction between the North and the South. But in the South, there are a few main provinces, while in the North, investment locations are selected and distributed more widely.