Setting up a business in Vietnam industrial zones: Where is the best location?

When starting out, you'll need to decide where you'll conduct business. There are many things to consider when choosing a location for your business venture, whether setting up a factory for the first time, or looking to expand to Vietnam industrial zones.

The US-China trade war, additional investment and new free trade agreements have all had a positive effect on Viet Nam’s industrial sector. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) became official in January while the EU Viet Nam Free Trade Agreement (EVFTA) was signed in June 2019. This historic and ambitious agreement will eliminate 99% of customs duties and has raised interest in industrial property.

As foreign invesment is increasingly pouring in Vietnam, the number of industrial zones continues to rise. According to the Ministry of Planning and Invesment, there are 326 industrial zones established with a total area of 95,500 ha. Of which, 251 industrial parks were operating with 60,900 ha, the occupancy rate reached 74%; 75 industrial parks (29,300 ha) are under construction, compensation and site clearance; 17 coastal special economic zones have a total supply of 845,000 ha with 3.6 million employees.

While industrial zones work well for many businesses in the country, investors should take time to learn more before creating a shortlist of locations to visit. In this article, we’re going to offer you advice when choosing a business location and provide you with a few resources we think you’ll find useful as you work through the process.

Foreign invesment is increasingly pouring in Vietnam due to the US-China Trade War

Overview of Vietnam industrial zone location

Industrial zones in Vietnam are centralized in 3 regions – the Northern, Central and Southern regions. Each region has its own characteristics, as well as unique incentive programs.

1. Northern region

The North comprises of 25 provinces, while the North Key Economic Zone (NKEZ) makes up 7 cities and pronvices, including Hanoi, Hai Phong, Bac Ninh, Hai Duong, Hung Yen, Vinh Phuc and Quang Ninh. The area has seen significant development in the past 5-10 years. It’s particularly suitable for companies want to shift their manufacturing in China to Vietnam due to the proximity of this area to the country.

2. Central region

The Central Key Economic Zone (CKEZ) compromises of 5 provinces: Thua Thien Hue, Da Nang, Quang Nam, Quang Ngai and Binh Dinh, with the major of activity occurring around Da Nang. Although the Central region is not ebstablished compared to the North and the South, the region has its own advantages of cheap labour cost and living cost. It’s got huge potential in investment attraction in the next few years…

3. Southern region

Made up mainly eight cities and provinces including Ho Chi Minh city, Binh Duong, Dong Nai, Long An, Ba Ria – Vung Tau, Binh Phuoc, Tay Ninh and Tien Giang, the Southern Key Economic Zone (SKEZ) is considered to be the most active economic zone across the country. The SKEZ is known as an industrial hub attracting the highest FDI given the favorable investment climate. There are many industrial parks here such as Long Hau Industrial Park (Long An), VSIP (Binh Duong), Amata (Dong Nai), Sonadezi (Dong Nai, Ba Ria-Vung Tau)…

Location for industrial zones: The Northern, Southern or Central region?

According to the 2018 Provincial Competitiveness Index, the top ranked provinces were Quang Ninh (North), Dong Thap (South), Long An (South), Ben Tre (South), and Da Nang (Central region).

Each region has its core industries which investiors can consider to narrow down options:

• The Northern region: Computer, electronic and optical products, machinary and equipment, fabricated and metal products…
• The Central region: Food processing, fabricated metal products, other non-metallic mineral products…
• The Southern region: Machinary and equipement, textile and apparel, fabricated metal products, rubber and plastic products…

The North is arguably the better choice for enterprises importing input goods from China, while the South has the advantage of being near the largest commercial port in Vietnam. Proximity to key destinations such as airports, seaports, major cities, main highways, and borders are also important.

Industrial zones possess land use rights from the government and essentially sublease their land and existing factories to tenants for a period of up to fifty years, depending on when the industrial zone was established. Prices vary considerably and depend on a number of factors that influence demand, including the location and quality of the industrial park.

Textile and apparel are core industries in the South Vietnam

Top industrial parks in the South

Known as industrial hub of Vietnam, The Southern region has many industrial parks and clusters which attracts the highest FDI.

Vietnam-Singapore Industrial Park (VSIP)

VSIP has developed a total of 9 projects across the country with a total land fund of more than 8,600 hectares for the purpose of industrial, residential, and services. VSIP is supplying production infrastructure to 840 clients from more than 30 countries and territories, with a total investment of 14 billion USD and creating direct jobs for more than 250,000 domestic and foreign workers. VSIP has also gradually shifted towards developing Industrial – Service – Urban Complexes aimed at creating a sustainable working, living, learning and playing environment.

Amata City Bien Hoa Industrial Park

The Park is a premier choice for new facilities in Vietnam; especially those that need easy access to shipping, reliable power and water supplies, and a quality environment to attract and retain high quality employees. Amata (Vietnam) Co., Ltd. was established in December 1994, as a joint venture Project between Amata Corporation Public Company Limited, Thailand and Sonadezi Bien Hoa, Vietnam – a State – owned developer of industrial estates in Dong Nai Province. To date they have developed Bien Hoa 1, Bien Hoa 2 and Go Dau; which are some of the most successful industrial estates in the south of Vietnam.

Long Hau Industrial Park

Established on May 23, 2006, Long Hau Corporation (LHC) is the investor of Long Hau Industrial Park. After 13 years of operation, Long Hau IP has attracted more than 200 domestic and foreign investors. The park offers 5 main products: Industrial land, Ready built factory for lease, Build-to-suit factory, High-rise factory, High-tech factory in Da Nang Hi-tech Park and Long Hau Commercial & Services Building.

Long Hau Industrial Park owns a strategic location near Ben Luc – Long Thanh Highway, Saigon – Hiep Phuoc port and SPCT port which helps investors save time, transportation costs and conveniently connect to Ho Chi Minh City center, the Eastern and Western area.

Long Hau IP is constantly improving and bringing excellent products, services and high-qualified utilities to enterprises in the park and becoming a partner in their success.

Long Hau Industrial Park