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Vietnam became the 2nd most attractive factory globally

Vietnam became the 2nd most attractive factory globally

Friday 10, 07 2020
Vietnam is considered as one of the world's leading production centers in terms of operating conditions and cost competition, only below China.

In the annual ranking of relevant global production markets based on a comparison of 48 countries in Europe, the Americas and the Asia Pacific by Cushman & Wakefield announced on July 9, China. is still the most attractive global production center, ranked second in Vietnam. In particular, the annual global risk index (MRI) assesses the attractiveness of the market based on 20 variables, divided into the last 3 ranking criteria including conditions, costs, and risks. The baseline data for making MRI come from reliable sources such as the World Bank, UNCTAD, and Oxford Economics.

In terms of costs, in 2020, Vietnam has risen to the second position after coming in fourth place last year.

Mr. Paul Tonkes - Director of Logistics and Industrial Services of Cushman & Wakefiel in Vietnam said that with 97 million young technology-savvy population, compared to other markets, Vietnam is still one of the competitors. Mostly, labor costs, land rental prices, and construction costs.

Add to that the stable geopolitical situation and high level of international market integration. In particular, the new EVFTA Agreement approved by the National Assembly will help investors shorten investment procedures and embark on production soon. Vietnam is also trying to improve its position on the value chain, shifting its structure to more technologically advanced industries.

In terms of production conditions, China and the US are still the two leading regions with diversification combined with boosting the value chain to focus on telecommunications, high technology, computers ...

Vietnam became the 2nd most attractive factory globally

The risk aspect of MRI is calculated based on the low level of economic and political risks of each country, while also considering future geopolitical risks. With this criterion, Canada and the United States ranked first and second, respectively, thanks to available natural resources, abundant labor force, incentives, consumer markets, large infrastructure, and transparency high. Despite being in a trade conflict with the United States, China still ranks 5th in low-risk rankings.

Mr. Tonkes said that even when the Covid-19 epidemic was not over globally, Vietnam still had certain benefits. "The Covid-19 pandemic has shown that Vietnam needs to strengthen the development of factories and warehouses to be ready for manufacturers moving out of China. Many large manufacturers have signed land lease contracts in advance during the epidemic and it is expected to begin construction of the plant as soon as Vietnam reopens its border, "Mr. Tonkes said.

According to the JLL report, by the end of the second quarter of 2020, the rental price of industrial property in the southern region still increased rapidly despite the disease due to the scarce land fund, recorded at 106 USD / m2 / lease cycle, up 9.7% year on year. The price of the ready-built factory is stable at 3.5 - 5 USD / m2 / rental cycle.

The total leased land area of ​​the South currently reaches 25,045 ha. Some of the remaining land banks for rent in some existing industrial parks in Ho Chi Minh City are still delayed due to difficulties in compensation and site clearance and recently the impact of Covid-19, making this supply can debut. The scarcity of supply is becoming more pronounced as the existing IPs are gradually being filled and new land is being delayed.

Vietnam’s coffee industry: yield may decrease by 15% in crop season 2019 - 2020

Source: Vietnam Finance


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