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Hai Phong is believed to be the new industrial hub of the North

Hai Phong is believed to be the new industrial hub of the North

Industrial output and investment remain vigorous as Vietnam develops as a key regional manufacturing hub. Amidst the U.S.-China trade tensions, Vietnam can serve as an alternative destination as manufacturers restructure their supply chains to lessen the effects of the trade war.
00:00, 09/04/2019
Hai Phong’s many advantages will prime them to become the new Northern key industrial hub.

Hai Phong’s many advantages will prime them to become the new Northern key industrial hub. (Photo: kinhtevadubao.vn)

In Q1/2019, Vietnam maintained stable economic growth, according to Savills’ latest report. GDP growth was 6.8%, mainly contributed by manufacturing and processing.

FDI was high for both newly registered and disbursed capital. Manufacturing and Processing continues to dominate, accounting for 75% of newly registered capital with US$2.8 billion. China is the largest contributor of newly registered FDI with a 19% share, followed by Singapore at 18 percent.

Savills Hanoi Real Estate Market Overview report showed a 10.3 percent increase YoY in industrial production, owing to stronger manufacturing production and increased electricity and supply. Increase in output for manufacturing rising to 12.8 percent.

Manufacturing PMI in February was 51.2 points, the weakest growth in PMI since March 2016, as the result of silent demand and falling employment.

Strong performance of Hai Phong City

Hai Phong’s industrial market has active since 1994 and is one of leading markets in Northern Viet Nam. Up to Q1/2019, 11 industrial park (IP) offered approximately 2,700 ha of leasable area, accounting for 57% of total area. Hai An District was most dynamic, accounting for 64% of total industrial area in Hai Phong, followed by An Duong, Thuy Nguyen and Do Son districts. Five IP’s were fully occupied whilst rent ranged from US$73 to US$135/m², excluding yearly management fees.

“Hai Phong is key industrial hub thanks to its improving logistics infrastructure, abundant land supply and strong local government effort”, said John Campbell, Senior Consultant, Industrial Services at Savills Vietnam.

Improving logistics infrastructure

Hai Phong has prioritized PPP developments of infrastructure in industrial zones, economic zones, seaports, port logistics services and commercial infrastructure. Up to Q1/2019, Hai Phong had 32 seaports, including four international seaports; of which, one is a deep-water port, Tan Vu – Lach Huyen. The government has approved over US$268 million to finance 11 key road infrastructure projects to be carried out over 2019 and 2020.

 

Trang Due industrial park in Hai Phong City.

Trang Due industrial park in Hai Phong City. (Photo: thueban.com)

Abundant land supply

Two IP’s launched at the beginning of 2018. Key land supply set to accommodate expected interest included Deep C Phase 2 and 3 as well as Nam Dinh Vu Industrial Park. Future supply includes Trang Cat Industrial Park, with infrastructure set to finish at the end of this year and Nam Cau Kien Industrial Park Phase 2 in July 2019.

Strong local government effort

Most of Hai Phong’s industrial parks are in the Dinh Vu – Cat Hai economic zone, one of 15 economic zones in Viet Nam. According to Article 16 in Decree 218/2013/ND-CP, new investment projects in economic zones have a tax exemption for four years and reduction of 50% in tax payable for the next nine years. This is highly advantageous compared to other IP’s. In addition, local authorities showed more efforts to create the best conditions for investors by reducing the delays for site clearance and investment licensing.

The new Northern industrial hub

According to industrial cluster development planning to 2020 with vision to 2025, Hai Phong will have 12 new industrial clusters by 2020, raising the total land area to 1,080 ha while achieving an occupancy rate of 70 percent. By 2025, it is expected to increase to a total land scale of 1,377 ha and an occupancy rate of 80 – 90 percent. Furthermore, according to the Foreign Investment Agency in 2018, Hai Phong attracted US$3 billion in registered FDI, ranking third nationwide.

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