According to JLL’s Market Overview Report, the number of inquiries is still significant but the transaction is stalled because of Covid-19 outbreak.
In Q1/2020, the demand for land is still high thanks to Vietnam’s good industrial development background in previous quarters. However, from February 2020 when the COVID-19 outbreak began, the restriction of movement among regions has caused the delay to the transaction, because investors especially foreign investors, can not directly take a field trip or work with industrial park developers. Successful transactions in the quarter were mostly done before the epidemic. The occupancy rate of the whole area is increased at a relative rate, about 200 percentage points compared to that in Q4/2019 and reached 72% by the end of Q1/2020.
The land area is still sufficient to meet the leasing needs
According to a report of the Department of Economic Zone Administration (Ministry of Planning and Investment), by the end of March 2020, Vietnam has established 335 industrial parks (IPs) with a total natural land area of about 97.8 thousand hectares; in which industrial land area is about 66.1 thousand hectares, 260 industrial parks have been put into operation with the occupancy rate of about 75.7%; 75 industrial parks are under construction with a total area of about 29.2 thousand hectares. For economic zones (EZs), the whole country has 17 coastal economic zones with a total land area and water surface of more than 845 thousand hectares, the leased land area in functional areas in the EZ reaches over 40 thousand hectares.
No new IPs has been put into operation in the last quarter. Bac Ninh and Hai Phong with large supply still play the role of two leading industrial markets in the North. Thanks to the strong industrial development foundation, the trend of new industrial parks and expansion stages will also focus on developing mainly in these two provinces. Land price keeps rising amid the crisis and Vietnam has been a promising destination since the wave of factory relocation from China began. Although the Covid-19 epidemic is causing certain difficulties with business decisions and relocation activities, IP owners are still confident to increase land prices as it is a long-term investment trend. With a well-developed infrastructure and sharing border with China, the North attracts most of the major manufacturers who want to diversify their production portfolio besides their facilities in China. Therefore, the average land price in Q1/2020 reached US $ 99/m2/lease period, up 6.5% over the same period last year. Ready-built factories – a favorite choice of small and medium-sized businesses – remain stable at rent of US$ 4.0-5.0/m2/month, and are fully occupied already.
Source: Report of Department of Economic Zone Management, Quarter I / 2020 – Ministry of Planning and Investment; JLL.
On March 30, 2020, the Council of Europe adopted a Free Trade Agreement (FTA) between the European Union (EU) and Vietnam (EVFTA).
Mr. Gordan Grlić Radman, Croatia’s Minister of Foreign Affairs and European Affairs – the EU’s rotating chairperson – said: “This agreement is the second document that EU has signed with a Southeast Asian country, after Singapore. It is also the most ambitious free trade agreement ever signed with a developing country.”
The Vietnam – EU Investment Protection Agreement (EVIPA) was also signed at the same time with the EVFTA Agreement on June 30, 2019 in Hanoi. The EVIPA Agreement will need to be ratified by all member states according to the respective national procedures before it becomes effective. Once approved, this Agreement will replace the bilateral investment agreements that 21 EU member states currently have with Vietnam.
Leaders of the Party, State and National Assembly have recently affirmed their determination to ratify EVFTA in the shortest time.
EVFTA is a comprehensive and high-quality agreement, it guarantees mutual benefit for both Vietnam and the European Union (EU), having taken into account the development gap between two sides.
This agreement was started and concluded in the context of the sound bilateral development of Vietnam-EU bilateral relations, especially in the field of economy and trade.
EU is one of Vietnam’s leading trading partners with a two-way turnover of US$ 56.39 billion in 2019, of which exports reached US$ 41.48 billion, imports from the EU reached US$ 14.91 billion.
On February 12, the Free Trade Agreement and the Investment Protection Agreement (IPA) were approved by the European Parliament (EP). On March 30, the European Council decided to ratify the EVFTA Agreement. This is an important decision, marking the completion of the entire process of ratification of the EVFTA Agreement on the European Union’s side.
Under the process, the EVFTA Agreement will take effect after being ratified by the National Assembly of Vietnam and 30 days after the two sides complete the procedures to notify each other.
According to economic experts, although the Covid-19 epidemic is causing certain difficulties, Vietnam is still a potential destination in the long term thanks to the positive outlook of the economy and the wave of manufacture transition away from China. Facing this trend, Viglacera’s industrial parks (IPs) continue to maintain their attraction to many investors in the first quarter of 2020.
From the fourth quarter of 2019, Viglacera has continuously welcomed many leading enterprises from China, Taiwan, Hong Kong, South Korea, Japan and Europe to survey IPs, estimating the total leased land area over the past time up to over 60 hectares with total investment of hundreds of million dollars.
Specifically, Phu Ha Industrial Park (Phu Tho province) has successfully attracted 4 FDI from Hong Kong, Taiwan, South Korea producing children’s toys, automobile lights, camera components for mobile phones and manufacturing helmets and its accessories.
At Dong Van 4 Industrial Park (Ha Nam), the world’s leading synthetic diamond manufacturer and processor ILJIN Diamond (South Korea), after a thorough research, has decided to invest in building the first factory in Vietnam. At the same time, the park welcomed another Korean company, specializing in the production of automotive dashcams, and a number of other domestic investors.
As noted, in the first 3 months of 2020, Dong Mai Industrial Park has welcomed 7 more foreign enterprises which decided to rent a land area of nearly 25ha to manufacture electric bicycles, electromechanical tools, mechanical parts, assembling and accessories.
Besides, even though Yen Phong 2C Industrial Park (Bac Ninh) was just started in January 2020, it immediately received the attention from many investors, quickly reached an agreement and signed initial contracts with HyoSung TNS Inc (a member of HyoSung Corporation) along with other supporting businesses.
HyoSung Corporation is known as one of the global scales, multi-disciplinary corporations and also one of the three largest economic groups in South Korea with 114 factories, centers and sales offices in 29 countries and territories around the world.
Viglacera’s IPs constantly attract the attention of domestic and foreign investors
That the Covid-19 outbreak started in February 2020 makes impossible for investors, especially foreign investors to come to Vietnam, however they still stay in touch with Viglacera via online contacts to ensure the progress of implementation of the investment and business plan in 2020, many of investors have already booked for a site visit after the disease is controlled.
This is a positive signal for the recovery and development of the industrial park’s real estate market in general and Viglacera’s investment attraction in particular. At the same time, in order to prepare for the recovery after the disease, Viglacera has been mobilizing resources to clear the site and complete infrastructure for the next land lots.
Map of Viglacera’s industrial parks in Vietnam
(Phu Tho, Bac Ninh, Hung Yen, Ha Nam, Thai Binh, Quang Ninh, Thua Thien Hue)
Up to now, Viglacera has developed 11 industrial parks in Vietnam and 1 economic zone in Cuba, attracting nearly 15 billion USD of FDI capital from more than 300 domestic and foreign enterprises, creating jobs for tens of thousands of workers in the area. Thanks to the favourable locations in many provinces, Viglacera’s Industrial Parks offer a diverse land selection to investors to meet their business needs. All industrial parks have clean land with adequate, synchronous and modern infrastructure, and are all ready to welcome businesses to lease and build factories.
Proud to be the leading industrial park developer in Vietnam with over 20 years of experience, Viglacera is now owning many active industrial parks, such as: Tien Son Industrial Park (Bac Ninh), Yen Phong Industrial Park (Bac Ninh), Yen Industrial Park Phong 2C (Bac Ninh), Phu Ha Industrial Park (Phu Tho), Hai Yen Industrial Park (Quang Ninh), Dong Mai Industrial Park (Quang Ninh), Tien Hai Industrial Park (Thai Binh), Dong Van IV (Ha Nam), Phong Dien (Thua Thien Hue), Yen My Industrial Park (Hung Yen), ViMariel Economic Zone (Cuba). It is expected to start Thuan Thanh Industrial Park (Bac Ninh) in 2021.
For further information, please contact the hotline: (+84) 888 25 22 88 | Website: https://viglaceraip.com
More images of Viglacera’s IPs:
The government has passed a VND62 trillion ($2.6 billion) financial support package for poor people and businesses affected by the Covid-19 pandemic.
The package, approved by Prime Minister Nguyen Xuan Phuc Friday, targets six categories of individuals and businesses.
Poor people await aid from a charity group on Ly Chinh Thang Street in District 3, HCMC, April 3, 2020. Photo by VnExpress/Nguyet Nhi.
Those people losing their jobs due to the Covid-19 crisis for 14 days or more will get a monthly allowance of VND1.8 million ($77).
Part-time workers who are unemployed but have not received unemployment benefits will get a monthly allowance of VND1 million ($43).
Poor and near-poor households would receive VND250,000 ($10.7) per month while those with a record of meritorious services to the nation would get VND500,000 ($21.5) per month.
Household businesses with revenues below VND100 million ($4,300) a year who’ve have had to suspend operations from April 1 due to the Covid-19 pandemic would also be supported with VND1 million per month.
The financial support will be provided over at least three months until June. Of the VND62-trillion package, nearly VND36 trillion ($1.55 billion) will be taken from the central government and local administration budgets.
In addition, businesses that have suffered financial difficulties as a result of Covid-19 will be allowed to borrow money from the Vietnam Bank for Social Policies at zero percent interest to pay their employees’ salaries for three months. The loans will cover a maximum of 50 percent of the local minimum wage, and businesses will be responsible for paying the remaining salary.
The Planning and Investment Ministry has estimated that 250,000 workers will lose their jobs this quarter and another 1.5-2 million face a similar threat in the coming months.
The ministry has also warned that if the pandemic situation worsens, 400,000 would lose their jobs and three million more could be laid off.
The government has ordered “non-essential” businesses like massage parlors, karaoke bars, tourist and amusement sites, movie theaters, beauty salons, beer shops, restaurants, and eateries to be closed until April 15, saying the country was entering a critical two-week stage in its Covid-19 fight.
As of Friday morning, Vietnam had recorded 255 Covid-19 patients, 131 of whom have been discharged.
The Covid-19 pandemic has claimed 95,500 lives in 209 countries and territories.
Vietnam’s GDP growth hit roughly 3.82 percent in the first quarter, the lowest since 2010, due to the coronavirus impact, according to the General Statistics Office. Last year, GDP expansion hit 7.02 percent, the second highest growth figure in the last decade, after the record 7.08 percent in 2018. – VnExpress