1. Vietnam outlook????14
JONATHAN TIZZARD
C&W-industrial
F
oreign direct investment in Vietnam has in-
creased year-on-year since 2009, with inward
FDI for 2014 recorded at $15.64 billion, up 9.6
per cent year-on-year (y-o-y) and the manufacturing
and processing sector accounted for 71.6 per cent of
foreign direct investment in 2014.
This increase in manufacturing has had a marked
effect on exports, with the value rising to $150 Billion,
an increase of 13.6 per cent y-o-y, leading to a positive
trade balance in 2014 amounting to $2.06 billion, the
third continual year of trade surplus since 2012.
According to statistics from the General Statis-
tics Office of Vietnam as of September 20th, 2015,
there were 1,432 newly registered foreign direct
investment (FDI) projects in Vietnam with the total
investment capital amounting to $11.04 billion, up
24.3 per cent in the number of projects and 44.5 per
cent in the amount of registered capital compared to
the same period last year.
There were 461 projects with adjusted capital,
providing an additional $611.7 million. Inward FDI
for 9 months 2015 was recorded at $17.15 billion,
including both newly registered capital and adjusted
capital projects, which represents a large increase of
53.4 per cent y-o-y.
Processing and manufacturing was the industry
attracting the largest proportion (i.e. 66.3 per cent)
of inward FDI into Vietnam with total registered
capital of $11,369.5 million (CAN WE SAY $11.4
BILLION???) followed by electricity production and
distribution (15.3 per cent) and real estate (10.5 per
cent).
A quick scour of the business section of any
Vietnam news website will give an indication of the
growing numbers of businesses now choosing Viet-
nam as their preferred manufacturing hub.
As an example, the Hong Kong-based contract
garment maker, Lever Style, began moving their
clothing manufacturing (in this instance for the Japa-
nese super brand Uniqlo) to Vietnam from April
2015. The company expect to offer their clients a 10
per cent discount per garment as a result of manu-
facturing in Vietnam. Procter & Gamble (P&G) are
constructing a plant in Binh Duong with investment
capital of $100 million which should be completed
in December. Microsoft is closing two manufacturing
plants in China and relocating part of the manufac-
turing to Vietnam.
Other notable tech manufacturers already in
FDI driving the manufacturing sector
Vietnam is rapidly becoming the de rigeur destination for companies wanting to establish overseas manufacturing
facilities, due to the abundant supply of cheap labour and its strategic location in Asia. Jonathan Tizzard – Director,
Research & Valuation of Cushman & Wakefield Vietnam shared his view on the issue.

2. Văn phòng và mặt bằng bán lẻ 15
country include the world’s leading smartphone
maker, Samsung, along with Intel and LG also hav-
ing significant operations in the country.
The bulk of this investment from overseas is
currently from other countries in Asia, with Japan,
South Korea, China, Taiwan and Singapore tradition-
ally accounting for a lot of this (and more recently
Malaysia as well).
However, now that the Trans-Pacific Pact has
been ratified, we expect to see many more compa-
nies from the US investing here in order to benefit
from the competitive advantages that Vietnam has
in the manufacturing and processing sectors.
THE VIETNAM INDUSTRIAL MARKET
The latest industrial park master plan in Vietnam
up to 2015, with orientation towards 2020 with ap-
proval from the Prime Minister, includes 461 projects
covering a total of 142,000 hectares of land – of which
82,800 hectares from 295 projects have been estab-
lished or granted investment licenses with 67 per cent
(55,700 hectares) comprising leasable industrial area.
Among the 295 established industrial parks(IPs),
there were 212 operating IPs; the remaining 83
IPs are either under compensation (CONSIDERA-
TION???) or basic construction. These projects were
developed across 60 cities and provinces across the
country, mainly concentrated in key economic zones
– to take advantage of their strategic locations and
economic potential.
A review of the aforementioned 461 industrial
parks reveals that there are 58 partially developed
IPs, 9 IPs whose investment licenses were revoked
and likely to be transferred to financially capable
developers and 157 undeveloped IPs.
This suggests that there is plenty of supply avail-
able to take advantage of the flood of manufacturers
that soon arrive on Vietnam’s shores. However, the
geographical spread of the parks hides a number of
trends that come to light as illustrated below:
Firstly, industries tends to group together to
take advantage of shared knowledge, easy access to
supply chains and access to preferential tax rates and
customs procedures. This means that certain indus-
tries will pay more to be located in a certain location,
although this only happens after some time as these
‘hubs’ develop.
Advantages of these hubs include allowing for
educational institutions to set up nearby in order to
learn hands on about the industry and gain a deeper
and complete technical understanding of the manu-
facturing process as well as the wider marketplace
for the particular product.
A good example of this is Silicon Valley in the

3. Vietnam outlook????14
USA which has become a hub for the IT/software
sector. We can see a hub in Vietnam forming on
the outskirts of Hanoi in the high-tech manufactur-
ing sectors as companies such as LG and Samsung
manufacture there and have attracted an increasing
amount of suppliers to the area. These hubs will
continue to develop moving forward and should be
viewed as a positive development.
Secondly, those parks located near to major
cities, such as Hanoi and Ho Chi Minh, have tradition-
ally performed much better than those in remote
locations for fairly obvious reasons, namely access to
a large labour force and a large market as well as a
better infrastructure system. Rents and occupancies
in parks around these cities are much higher than in
other areas, reflecting the demand that manufactur-
ers place on these locations. Until the infrastructure
opens up new areas, this will remain the case.
Thirdly, the infrastructure in Vietnam, for both
transport & logistics as well as utilities e.g. power
and water are still fairly undeveloped and the quality
of these in certain locations make them much more
desirable than other locations. This is an opportunity
as well as a threat to real estate developers as infra-
structure in Vietnam is rapidly developing and there
are plans to hugely expand and upgrade the existing
rail, road and water networks. This will open up new
areas to manufacturing and processing and create
more jobs and wealth in areas that were previously
all but unreachable.
Finally, local governments vary in their appetite
or their ability to attract investors and developers.
This can be a very important point for many busi-
nesses as having the local politicians on your side
can mean the difference between an efficient and
profitable business and one which is mired in bu-
reaucracy. It is no surprise that having a reputation
as being ‘open for business’ in a particular province
inevitably leads to an influx of local and foreign
development.
Vietnam is irrevocably marching towards indus-
trialisation and it could be argued that even without
the TPP, the industrial future remains bright. Stum-
bling blocks that have been seen in other countries
include serious environmental damage e.g. rampant
pollution. In addition, the unequal distribution of
wealth could lead to social friction in future. If care-
fully managed, however, it appears Vietnam will con-
tinue marching full speed towards industrialisation
which should mean a much higher standard of living
for generations to come.
TOTAL AREA AND NUMBER OF IPS/EPZS IN VIETNAM BY YEAR (1991 – 2014)

4. Văn phòng và mặt bằng bán lẻ 15