Industrial Real Estate in Vietnam: By providing you a combined 50,000 acres of industrial development lands from 30+ partners in the region and along with our expertise & experience, we can help you find your ideal location and estate to build, produce, and grow.
Should You Invest in Vietnam?
Transportation & Logistics
Vietnam’s logistics infrastructure, while demonstrating significant growth potential, faces notable challenges due to its heavy reliance on road transport, leading to congestion and supply chain vulnerabilities. This over-dependence increases operational costs for businesses, including higher insurance premiums to mitigate risks of damage and injury. To address these challenges and enhance its transport network, Vietnam is undertaking several key infrastructure projects aimed at diversifying and improving its logistics capabilities:
- International Transshipment Port in Ho Chi Minh City: A planned $6 billion project in the Cần Giờ District will significantly expand Vietnam’s port infrastructure. This port, covering 5.7 square kilometers with a 7.2-kilometer-long main wharf, will accommodate ships up to 250,000 tonnes, enhancing Vietnam’s capacity to handle 15 million twenty-foot equivalent units (TEUs).
- High-Speed Rail Initiative: The government is exploring the development of a high-speed rail network across Vietnam to facilitate both passenger and cargo transport, promising to link major economic hubs and spur economic growth.
- Electric Public Transport and EV Charging Network: With a $135 million climate financing package from the Asian Development Bank (ADB), Vietnam is advancing towards sustainability by developing its first fully electric public transport bus fleet and a national EV charging infrastructure.
Despite these initiatives, Vietnam’s transport infrastructure quality and extent remain mixed, with urban areas generally better served than rural regions. Railways and inland waterways, crucial for diversifying freight transport modes, are underdeveloped. The country’s logistics sector, though rapidly growing, is hampered by regulatory uncertainties that could affect project timelines and investment attractiveness.
Power Generation & Distribution
Vietnam has a relatively mature infrastructure in power generation & distribution. Currently, more than 95% of rural households have access to electricity, and almost all xã (smallest administrative area) have access to the grid. The government has also launched the rural electrification program to boost the electricity access to 99.9% of population until 2030.
The Vietnamese government tightly controls retail electricity prices, with rates set based on recommendations from the Ministry of Industry and Trade (MOIT) and approval by the Prime Minister. A unified tariff applies nationwide, which is relatively low compared to other regional countries. The system is designed so that higher charges for industrial, commercial, and foreign consumers cross-subsidize the rates for urban and rural residential users. To encourage private sector investment in independent power producer (IPP) projects, MOIT and Vietnam Electricity (EVN) are planning for gradual price increases and the phasing out of government controls and subsidies. Under current regulations, EVN is allowed to adjust energy prices every six months without government approval. Price adjustments of up to 10% are permitted if input costs (such as fuel prices, foreign exchange rates, generation mix, and market prices in the competitive power generation market) increase by 3%. For price increases beyond 10%, government approval is necessary. Presently, energy prices range from VND1,533 to VND2,580 (approximately USD 6.3 cents to USD 10.75 cents) per kWh, varying with consumption levels.
Power Generation Outlook
In terms of the outlook, Vietnam’s PDP8 requires an estimated US$135 billion to implement its energy transition and infrastructure goals. This investment will be directed towards diversifying and expanding the country’s energy mix, significantly reducing reliance on coal, and increasing the share of renewables (excluding hydropower) to about 30% of the energy mix by 2030, up from 5% in 2020. Additionally, the plan outlines a substantial increase in gas usage as a transition fuel, with its capacity expected to rise to 38GW by 2030, representing 25% of total installed capacity. The plan also targets installing at least 6GW of offshore wind capacity by 2030 and contemplates the future use of hydrogen and ammonia in energy production by 2050. The US$15.5 billion from the Just Energy Transition Partnership (JTEP) with G7 countries is part of the financing but represents only a modest portion of the total required funds, indicating a significant need for additional investment and financial mechanisms to meet these ambitious goals.
However, rapid increase in electricity consumption as well as the disruption in the environment as El niño affect the whether conditions have caused power shortage. Just last year, Vietnam’s rolling power cuts have hit industrial parks in the country’s northern provinces where top global manufacturers such as Foxconn and Samsung have factories.
Supply Chain Ecosystem
Corporate Income Tax
Import & Export Duties
Availability of Skilled Labor
Political and Legal Risks
Economic and Financial Risks
Operational and Security Risks
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Our experience in Vietnam is diverse. While mostly in the industrial sectors, we also help life science, software, and service sector to help the find the ideal commercial property & partners in the country.
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