Vietnam has rapidly ascended as a premier destination for industrial investment in Southeast Asia. With a strategic location, robust infrastructure, a skilled workforce, and attractive incentives, the country offers a compelling proposition for foreign investors. This article explores the key factors that make Vietnam’s industrial zones a competitive choice in the region.
What is Industrial Property? (1)
Industrial property refers to real estate used specifically for industrial activities such as manufacturing, warehousing, logistics, and distribution. These properties include factories, warehouses, industrial parks, and export processing zones, all of which are essential components of modern supply chains.
Unlike residential or commercial spaces, industrial properties are usually located near transportation hubs—such as highways, ports, or airports—to support the efficient movement of goods and materials. They are designed with features like large floor areas, high ceilings, and loading docks to meet the demands of production and storage.
With the global rise in trade and e-commerce, industrial real estate has become increasingly important, especially in emerging markets like Vietnam, where supply chain efficiency and investment in infrastructure are driving rapid industrial growth
Infrastructure of Vietnam Industrial Property (2)
Vietnam’s industrial parks are strategically located across the country, with over 400 planned zones and approximately 300 already operational, maintaining an impressive average occupancy rate exceeding 80% . These zones are well-connected to major transportation hubs, including ports, airports, and highways, facilitating efficient logistics and supply chain management.
Provinces like Binh Duong, Dong Nai, Bac Ninh, Hai Phong, and Long An are notable for their superior infrastructure, attracting substantial industrial investment . The government’s commitment to infrastructure development is evident in ongoing projects aimed at enhancing transportation networks and utilities, further bolstering the appeal of industrial zones
Qualified and Abundant Workforce (3)
Vietnam boasts a young, dynamic, and increasingly skilled labor force. As of 2024, the country has around 52.4 million workers, with over a quarter holding university degrees or vocational certificates. The unemployment rate remains low, reflecting a stable and resilient labor market.
To support industrial development, industrial zones often collaborate with local universities and vocational schools to ensure a steady supply of qualified workers. These partnerships help align training programs with the needs of key sectors such as engineering, IT, and manufacturing. With workforce development continuing to be a national focus, Vietnam offers a reliable and adaptable labor pool for long-term investment.
Incentives for Vietnam Industrial Zones
To attract foreign direct investment, the Vietnamese government provides a wide range of incentives specifically targeting industrial zones. New investment projects can benefit from Corporate Income Tax (CIT) incentives, including full tax exemptions for up to four years, followed by a 50% reduction for the next nine years. In addition, import duty exemptions are granted for machinery, equipment, and raw materials directly used in production, helping to reduce initial capital costs for manufacturers. (4)
Investors also enjoy land use incentives, such as reduced lease rates, lease terms of up to 70 years, and exemptions from land use fees in certain cases. These measures aim to lower the entry barriers and promote long-term investment in industrial infrastructure.(5)
Furthermore, the Vietnamese government is in the process of finalizing the Vietnam Fund for Investment Support, a strategic initiative to provide financial aid for infrastructure and workforce development, especially in high-tech sectors.
Challenges & Solutions When Renting Factories in Vietnam Industrial Zones (6)
While Vietnam’s industrial zones offer numerous advantages, investors may encounter certain challenges:
- Rental Costs: Factory rental prices can be high, especially in high-demand areas. For instance, in Northern Vietnam, industrial real estate rents rose 5.7% year over year, averaging US$130/m² per lease period. (6)
- Limited Leasing Flexibility and Certification Delays: Many tenants lack formal land-use certificates, hindering their ability to negotiate rental terms or secure tenancy. This creates uncertainty in industrial park development and investment.
- Pressure from Infrastructure Gaps and Cost Burdens: High financing costs, logistics expenses, construction costs, and labor rates are eroding profit margins. Compared to some neighboring countries, Vietnam must navigate steeper operational expenses
There are some solutions for these:
- Strategic Location Selection: Consider industrial zones in emerging provinces where rental costs may be lower, and space availability is more flexible.
- Negotiation and Customization: Engage with industrial park developers to negotiate terms and explore options for customized facilities that meet specific business needs.
- Infrastructure Investment: Collaborate with local authorities to invest in improving transportation and utility infrastructure in targeted industrial zones.
Vietnam’s industrial zones present a compelling proposition for foreign investors, combining strategic location, skilled labor, and favorable incentives. By understanding the landscape and proactively addressing potential challenges, businesses can effectively capitalize on the opportunities Vietnam offers in the industrial sector.
Source:
(1). New Western
(2). Vietnam Incorp
(3). Source of Asia
(4). Vietnam Briefing
(5). Global Referral
(6). Business Forum Magazine