Vietnam’s industrial parks development has seen tremendous growth, driven by global shihs in manufacturing and foreign direct investment (FDI). With over 400 industrial parks and numerous economic zones, Vietnam is positioning itself as a leading destination for industrial development in Southeast Asia. This blog post will explore the overview and the latest trends in Vietnam’s industrial development with insights from key industry players.
Table of Contents
- Overview of Vietnam’s Industrial Park Development
- State and Development of German Investments in Vietnam
- Key Development Trends in Vietnam’s Industrial Parks
- Conclusion
1. Overview of Vietnam’s Industrial Parks’ Development
By the end of 2023, Vietnam had established 414 industrial parks, including four export processing zones, covering a total land area of 89,126 hectares. The majority of these parks are operational, while others are in various stages of development. The rapid expansion of industrial parks across the four regions of Vietnam such as Dong Nai, Long An; Binh Dinh, and Bac Ninh, is a testament to Vietnam’s growing appeal as an industrial hub. This trend is driven by the increasing demand for manufacturing space, particularly from sectors like electronics, textiles, automotive, and food processing, which are vital to global supply chains.
Figure 1. Vietnam’s Key Economic Zones Picture source: Vietnam Briefing
State and Development of German Investments in Vietnam
German investments in Vietnam have experienced significant growth and diversification, particularly in the industrial parks. As of 2024, over 500 German companies have established operations in Vietnam, with around 100 actively engaged in production. German companies have been particularly active in sectors like manufacturing and logistics.
Regional Distribution of German Investments (1992-2017)
Historically, the majority of German manufacturing investments were concentrated in the Greater Ho Chi Minh City (HCMC) region. Between 1992 and 2017, nearly two-thirds of German manufacturing plants were established in this area. The Greater HCMC region’s infrastructure, proximity to key ports, and established industrial zones made it a prime location for foreign investments.
Shift in Investment Trends (2018-2023)
However, the past six years have seen a significant shih in investment patterns. From 2018 to 2023, new German manufacturing projects have been almost evenly distributed among three key regions: Greater HCMC, Central Vietnam, and the Hanoi-Haiphong corridor in the North. This shih is driven by several factors such as crowding-our effects, emerging industrial zones, and government initiatives.
Read our blog on German Investments 2024/25 here.
Key Development Trends in Vietnam’s Industrial Parks
Strategic Location and Infrastructure Development
Vietnam’s strategic location in Southeast Asia, with access to major shipping routes and proximity to key markets like China, Japan, and South Korea, makes it an attractive destination for industrial investments. The government is investing heavily in infrastructure, including roads, ports, and airports, to improve connectivity and support the growth of industrial zones. The development of the North-South Expressway, major seaports like Lach Huyen and Cai Mep-Thi Vai, and the expansion of airports such as Long Thanh International Airport are notable projects enhancing Vietnam’s logistical capabilities.
Figure 2. The construction site of Long Thanh Airport’s runway, June 20, 2024 Picture source: VN Express
The top 5 localities in Vietnam in terms of industrial park development include Dong Nai, Ho Chi Minh City, Binh Duong, Long An, and Bac Ninh. Due to their strategic locations and robust infrastructure, Dong Nai and Bac Ninh have become hotspots for industrial park development. KTG Industrial has been expanding its presence in these regions, driven by the increasing demand for industrial space from both domestic and international companies. The company’s strategic focus on these localities highlights the potential for continued growth in these areas.
Rise of Ready-Built Factories and Warehouses
The demand for ready-built factories and warehouses is surging as companies seek to minimize initial capital outlay and speed up the time-to-market. This trend is particularly appealing to small and medium-sized enterprises (SMEs) and foreign investors who require immediate operational facilities.
KTG Industrial is leading the development of these facilities, offering flexible leasing options that cater to the specific needs of tenants.
Shift Toward Green and Smart Industrial Parks
Sustainability is becoming a significant focus in Vietnam’s industrial parks. Investors and developers are increasingly incorporating green technologies and practices into their projects. This includes energy-efficient buildings, waste management systems, and the use of renewable energy sources. For example, some industrial parks are integrating solar power, water recycling systems, and smart grid technologies to reduce environmental impact and meet global sustainability standards. The rise of “smart” industrial parks, which utilize IoT and automation to improve operational efficiency, is another trend gaining momentum.
Diversification of Industrial Hubs
While traditional industrial hubs like Ho Chi Minh City, Binh Duong, and Dong Nai continue to attract significant investment, there is a growing trend toward the development of industrial parks in less saturated regions. Central and Northern Vietnam Provinces, such as Quang Ninh, Hai Phong, and Binh Dinh, are emerging as new industrial hubs. These regions offer lower land costs, abundant labor, and favorable investment incentives from the government. BECAMEX VSIP’s projects in these areas are examples of this diversification, providing investors with new opportunities outside the traditional centers.
Figure 3. Benefits of Vietnam’s principal manufacturing investment regions Picture source: AHK Vietnam
Located in the Nhon Hoi Economic Zone, in the Canh Vinh commune, Van Canh district, Binh Dinh province, Becamex VSIP Binh Dinh Industrial Park is an Integrated Industrial Park and Township, emerging as a new frontier in Central Vietnam. BECAMEX VSIP Binh Dinh is tapping into this potential by developing state-of-the-art industrial parks in the region. The IP is poised to become a key investment hub, driving the socio-economic growth of Binh Dinh province and the Nhon Hoi Economic Zone. The company also sees significant opportunities for growth, especially as Vietnam continues to attract FDI from around the world.
Integration of Advanced Technologies
The adoption of advanced technologies in industrial parks is reshaping the sector. Developers are incorporating Industry 4.0 technologies, including automation, robotics, and data analytics, to enhance the efficiency and competitiveness of manufacturing operations. This trend is particularly relevant for German investors, who are known for their expertise in high-tech manufacturing. The integration of these technologies aligns with the global shih toward smart manufacturing and offers opportunities for German firms to bring their innovations to Vietnam.
DINCO E&C has played a pivotal role in industrial plants, and infrastructure construction projects. The constructor utilizes lightweight construction solutions like thin, light walls that offer superior
fire protection, heat, and sound insulation, replacing traditional brick walls. This approach optimizes space, reduces costs, and conserves natural resources. Thanks to the partnership with Asia Clean Capital Vietnam (ACCV), DINCO also provides advanced energy solutions, including Building Integrated Photovoltaics (BIPV) and Ground Energy Systems (GES), which enhance system performance, reduce costs, and increase energy efficiency.
Increasing Collaboration with Foreign Investors
Vietnamese industrial parks developers are actively seeking partnerships with foreign investors to bring in capital, expertise, and global best practices. This collaboration is particularly evident in joint ventures and strategic alliances with companies from Japan, South Korea, and increasingly, Germany. These partnerships are not only helping to finance large-scale industrial projects but are also facilitating knowledge transfer and the introduction of advanced industrial processes.
Regulatory Support and Incentives
The Vietnamese government continues to offer attractive incentives for foreign investors, including tax breaks, reduced land lease fees, and streamlined procedures for business establishment. These incentives are particularly appealing to German companies looking to enter or expand in the Vietnamese market. The government’s commitment to improving the business environment is reflected in ongoing regulatory reforms aimed at making it easier to invest and operate in the country.
Conclusion
Vietnam’s industrial parks development is at a pivotal point, presenting substantial opportunities for growth and investment. The steady increase in occupancy rates and rental prices within industrial parks reflects the sustained demand for industrial space. This trend is expected to persist, supported by Vietnam’s favorable investment environment and heightened interest from foreign investors, including those from Germany.
For German companies and investors considering expansion in Asia, Vietnam’s industrial landcape offer significant potential. A thorough understanding of the sector’s trends, opportunities, and challenges will enable investors to make informed decisions that align with their long-term strategic objectives.
Source: AHK
