Many foreign companies move factories to Vietnam, showing the potential for strong development of industrial real estate, according to Savills Vietnam.
They included many factories from China operating mainly in the fields of electronics, textiles, footwear and spare parts production, such as Hanwha, Foxcom, Lenovo, Nintendo, Sharp among others.
Sophie Dao, Partner at GBS, an investment consulting firm in Ho Chi Minh City told Vietnam Insider, in Q2-Q4 2019, the number of foreign companies requested GBS to support with formation of new company in Vietnam increased more than 90% with the same period of 2018.
The industrial sector is growing strongly with a tenfold increase in foreign direct investment (FDI) over the last decade. Good land supply is facilitating incoming manufacturing projects and the rise of rental options with ready-built factories (RBF) and built-to-suit (BTS) solutions. Vietnam must be more selective with projects to move up the value chain, improve competitiveness and ensure sustainable growth.
Low labour costs and government incentives, particularly preferential tax rates, will continue to be critical drivers of FDI. However, to maintain the transition to higher-value industries, Vietnam must focus on the quality rather than the number of investments.
By enabling the latest production technologies and increasing workforce training, the government is actively easing qualms around viability, labour shortages and rising costs for a more transparent business environment