The rise of coastal industrial zones
"Rise of coastal Economic Zones" seminar, held in Hanoi on 19 November, brought together some 200 participants of trade promotion organizations such as JETRO, JICA, and EUROCHAM, Department of Trade Promotion (MOIT Vietnam), Investment Promotion Center IPC North (MPI), international and local business leaders and investors.
This is a forum to update industrial real estate market trends in Asia and Vietnam organized by DEEP C Industrial Zones and Retail Services consulting CBRE Vietnam, with the companionship of Quang Ninh People’s Committee and Quang Ninh Economic Zones Authority.
Vietnam has been learning lessons for more than 30 years of industrial development in the coastal provinces of neighboring countries such as China and Thailand. The main industries that are prioritized to attract investment in these two countries must be mentioned as raw chemicals, pharmaceuticals, machinery, automotive accessories, and electronics. In addition, economic zones and industrial zones located near the sea always have great investment demands and maintain superior rates and occupancy rates. Vietnam's coastal regions are starting to see a similar trend, receiving as much investment as demand from both domestic firms expanding production and multinational corporations.
Consequently, the coastal provinces of Vietnam have been taking advantage of the available potentials to develop the industries. Compared to other provinces in the Northern region, Hai Phong and Quang Ninh have more supply allocated for industrial development.
Hai Phong is one of the biggest industrial hubs in Vietnam with significant projects such as DEEP C II and III and Vinhomes' new industrial zones. As of Q3 2020, the City recorded an average occupancy of 56% providing a recent launch of big Industrial Parks. Quang Ninh recently emerges as an industrial coastal province. The Province is expected to provide a large amount of industrial land bank in the future, with two economic zones (EZs) of Quang Yen and Van Don, of which Quang Yen coastal EZ is oriented to become a growth engine promoting investment for Quang Ninh. DEEP C, one of the major industrial park developers, is developing an industrial complex associated with a seaport in Quang Yen EZ to exploit geographical advantages and utilize the navigation channel to Lach Huyen deep-sea port.
DEEP C Quang Ninh covering a land fund of 1,700 hectares are connected directly with mega infrastructures system including Ha Long – Hai Phong, Ha Long – Van Don expressways, Cat Bi and Van Don international airports, Lach Huyen Deep Sea Port (100,000 DWT), and Cai Lan port (50,000 DWT). The set up itself makes DEEP C Quang Ninh an ideal investment location for a wide range of investment sectors, especially logistics enterprises. Moreover, investors in DEEP C Quang Ninh benefit from the best corporate income tax incentive package in Vietnam applicable to the new Quang Yen Economic Zone, with a 4-year exemption and 9 years of 50% reduction.
To attract investors, Quang Ninh and DEEP C prioritize the development of the processing and manufacturing industries. Secondary investors will have the highest corporate tax incentives in economic zones and - receive short-term vocational training costs for employees in the first 2 years from the date of issuance of Investment Certificate. For industrial park infrastructure investors, the lowest rate of land rent in 5 years will be applied and will be supported 30% in advance of compensation costs, site clearance, 30% support investment level of the wastewater treatment system in industrial zones (maximum VND30 billion) after completion of construction. Quang Ninh province is also focusing on infrastructure development such as urgently completing the Van Don - Mong Cai expressway: reducing the time to go to the Chinese border gate from 2 hours to 50 minutes, expected to be completed in 2021. Highways connecting Hanoi, Hai Phong, Quang Ninh, and major seaports and international airports have all been put into operation.
Speaking at the seminar, Mr. Bui Van Khang, Vice Chairman of Quang Ninh People's Committee emphasized: “Quang Ninh’s ambition is to develop Quang Yen Economic Zone into a center of industry, services, logistics, and modern urban area of Quang Ninh and Hong river delta through synchronization of technical and social infrastructure, development of hi-tech, environment-friendly industries and R& D centers”. At the same time, he affirmed his commitment to accompany enterprises to create a successful business in the province, as well as in DEEP C Quang Ninh Industrial Zones.
The growth of e-commerce and logistics companies since the start of COVID-19 has created a huge demand for storage space and distribution networks. Therefore, the need to find land to develop logistics facilities dominates the market. Since the end of 2018, the market has welcomed many foreign investors in logistics warehouse development such as BW Industrial, Logos, and entering the market.