Vietnam Industrial Park sector: Capitalizing on the global supply chain transformation

Vietnam Industrial Parks Gain Momentum Amid Global Supply Chain Shifts

Over the past decade, the reconfiguration of global supply chains has reshaped manufacturing dynamics, opening up new opportunities for Vietnam’s industrial park (IP) real estate sector. With its strategic location, competitive production costs, political stability, and extensive free trade agreements, the country has become a preferred destination for manufacturers seeking to diversify operations beyond China. This trend became more pronounced during the US-China trade tensions under President Trump’s first term.

While short-term uncertainties resurfaced following the initial announcement of reciprocal tariffs in April under Trump’s second term, concerns have gradually eased. On August 1, the U.S. finalized its tariff framework, lowering the rate on Vietnamese goods to 20%, down from the previously threatened 46%. This rate is only slightly higher than those imposed on regional peers such as Thailand, Indonesia, and Malaysia (all at 19%) and remains well below India’s 25%. Additionally, a 40% tariff on goods classified as transshipments will now be applied uniformly across all U.S. trading partners. This outcome reinforces the country’s competitive position in global manufacturing. With only a marginal difference in tariff levels, long-standing structural advantages, such as low production costs, policy stability, and strategic location, continue to outweigh any minimal tariff disadvantages. As a result, investor confidence is expected to recover, supporting renewed capital deployment and FDI inflows. Notably, the uniform transshipment tariff enhances relative appeal for manufacturers seeking to avoid punitive tariffs while maintaining operational efficiency. Thanks to its location adjacent to China, the country provides a strategic base for satellite production, enabling global manufacturers to localize supply chains and mitigate transshipment risks. For example, Apple expanded its supplier network locally from 27 in 2022 to 35 in 2023, while Samsung’s Tier-1 suppliers grew from 25 in 2014 to 306 in 2023, highlighting deeper integration into global value chains. Nevertheless, relocating fully integrated supply networks, especially in high-tech industries with decades of entrenched ecosystems, remains a complex undertaking unlikely to be completed within a single four-year U.S. presidential term. As a result, FDI momentum is expected to continue as manufacturers adjust to evolving trade dynamics.

Undemanding sector valuation offers investors opportunities to capitalize on industrial land bank expansion. The current occupancy rates of industrial parks stand at 80% in the Northern region and 89% in the Southern region, both key manufacturing hubs, highlighting the need for industrial land expansion. According to the national land use plan, industrial land area will increase from the current 96,000 ha to 210,000 ha by 2030. A key trend within this expansion will be the conversion of rubber land in prime locations, which presents a cost-effective solution while shortening the development process. Additionally, developers with extensive ready-for-lease land bank, solid financial positions, and proven expertise in attracting major tenants are ideally positioned to capitalize on the sector’s growth potential. Besides favorable outlooks, the sector’s valuation remains attractive, with the P/B ratio below its two-year average and the book value not fully reflecting the potential for land bank expansion, providing investors with growth opportunities.

Trump 1.0 sparks an FDI boom to Vietnam as global manufacturers pursue production diversification

Vietnam’s role as a strategic alternative to China was firmly established during President Trump’s first term, when the country attracted total USD143 billion in registered FDI, equivalent to nearly 22% of cumulative foreign investment since 1988. This surge reflected a broader global pivot toward cost-efficient production bases, as firms sought to diversify supply chains and reduce dependence on China amid rising trade tensions. The strategic location adjacent to China provides a logistical edge, allowing companies to adopt nearshoring strategies without compromising supply chain efficiency. Its proximity to the Southern Economic Corridor, often referred to as the “Silicon Valley of China” and responsible for 20% of China’s GDP in 2023, further strengthens its appeal for high-tech industries. During this period, major global multinationals such as Intel, Samsung, Nike, Adidas, Apple, and LG rapid expanded their operations in Vietnam, capitalizing on a favorable production environment. This influx of high-quality FDI has driven a structural transformation in the country’s industrial base, from labor-intensive manufacturing to higher value-added sectors such as electronics, automotive components, and machinery. Today, Vietnam produces approximately 50% of Nike’s and 30% of Adidas’s global output, while Samsung manufactures nearly half of its smartphones and tablets in the country.

Under Trump 2.0, Vietnam continues to stand out as a resilient and reliable alternative manufacturing base in the global supply chain.

Structural Advantages Sustaining Vietnam’s Manufacturing Edge

This resilience is anchored by structural advantages that extend well beyond low-cost labor:

• Stable political and economic foundation: The country maintains a predictable regulatory environment and a consistent pro-investment stance across administrations. These factors continue to provide long-term confidence for global manufacturers seeking to establish resilient operations.
• Competitive labor cost with rising productivity: Although manufacturing wages have increased at a CAGR of 8.7% over the past five years, it remains 20-80% lower than those in Thailand, Malaysia, and China. Crucially, productivity has improved in tandem with wage growth. According to the CEO of BW Industrial Development JSC, a leading ready-built factory developer established by Becamex IDC and Warburg Pincus: “After three months’ training, Vietnamese workers can reach 80% or more of Chinese workers’ efficiency, while earning less than 80% of Chinese wages – still an advantage. This labor dynamic continues to underpin its cost-efficiency advantage.
• Extensive trade network and elevated global partnerships: It is currently a member of 17 free trade agreements, granting it preferential access to major global markets. Since 2023, it has also elevated several key bilateral relationships to Comprehensive Strategic Partnerships, most notably with the U.S., Australia, France, Singapore, Indonesia, and Thailand, underscoring its role as a trusted and strategically aligned trade partner in the region.

Reforms and Infrastructure Upgrades to Enhance Long-Term Competitiveness

To reinforce its long-term competitiveness, the government is accelerating structural reforms and infrastructure upgrades to lower operating costs and enhance investor confidence.

• Administrative streamlining to reduce bureaucratic friction: Effective July 1, 2025, it will implement a major administrative overhaul, including the merger of several provinces and the restructuring of district-level governments. These reforms aim to reduce overlapping authorities, eliminate procedural redundancies, and shorten licensing timelines, particularly for foreign-invested manufacturing projects. The result is expected to be faster decision-making and improved ease of doing business for foreign investors.
• Accelerated infrastructure upgrades to lower logistics costs: With logistics costs estimated at 18% of GDP, higher than Thailand (14%) and Singapore (8%), it is prioritizing infrastructure investment to reduce this burden on exporters. Key projects include the expansion of the North–South expressway, new international airport terminals, deep-water seaport development, and the planned high-speed railway. These initiatives are designed to increase freight efficiency, enhance inter-provincial connectivity, and support large-scale industrial expansion.
• Power supply security to support uninterrupted production: Recognizing the critical role of stable energy in industrial operations, the government continues to invest in power generation capacity and transmission grid stability. Recent regulatory adjustments also aim to attract more private and foreign capital into renewable and backup power systems, reducing risks of blackouts or disruptions that could affect manufacturing output.
• Targeted incentives to attract high-tech investment: The newly established Investment Support Fund, offering competitive subsidies to attract strategic sectors such as semiconductors, artificial intelligence, and precision engineering. These include up to 50% support for initial investment and workforce training, 30% for R&D, and 10% for fixed asset purchases.
• In June 2025, the government officially approved its first Free Trade Zone (FTZ) in Da Nang. Designed to attract export-oriented and high-tech firms, the FTZ offers one-stop licensing, on-arrival customs clearance, tax incentives, and simplified administrative procedures for investment and operations. This landmark initiative marks a key step toward industrial upgrading and deeper integration into global value chains.

This favorable positioning is reinforced by Dezan Shira & Associates, which identifies Vietnam as the top choice for manufacturers shifting operations from China, outperforming regional competitors.

The development of the industrial park sector plays a pivotal role in advancing FDI attraction efforts

As of 2024, Vietnam hosted 447 IPs, concentrated in two key economic regions: the Southern Key Economic Zone (SKEZ) and the Northern Key Economic Zone (NKEZ). These zones form the backbone of the manufacturing sector, attracting global corporations across diverse industries.

The SKEZ is the most dynamic economic region, underpinned by robust infrastructure and a strategic location. The region benefits from a highly skilled workforce, proximity to the largest consumer market, and competitive leasing rates. Key infrastructure projects, such as Tan Son Nhat International Airport and Cai Mep – Thi Vai seaports, and the upcoming Long Thanh International Airport, provide seamless connectivity to global markets. While traditionally home to labor-intensive industries, the region is rapidly evolving, attracting high-tech and value-added sectors.

The NKEZ has emerged as a premier hub for high-tech industries. The zone has drawn substantial investments in electronics, semiconductors, and renewable energy, thanks to its strategic proximity to China’s Southern Economic Corridor. Competitive leasing rates and ongoing infrastructure upgrades enhance the region’s appeal. The NKEZ benefits from 13 highways improving connectivity between Hanoi and its surrounding provinces. Additionally, Hai Phong’s seaport clusters, positioned along key international shipping routes, provide direct access to global markets. In 2025, its annual capacity is expected to increase by 40% to 10 million TEUs, further enhancing room for trade activities.

Rising demand for Ready-Built Factories (RBF) and Warehouses (RBW). This trend is underpinned by the relocation of high-tech industries and the rapid rise of the e-commerce sector, which is forecast to expand at a 10% CAGR over the next five years. These facilities offer compelling advantages, enabling businesses to quickly establish operations and explore local markets without committing to large-scale investments upfront. Currently, the market provides over 10.5 million sqm of RBF space and 8.3 million sqm of RBW space to meet this growing demand. Prominent developers like Mapletree, BW Industrial, and SLP are capitalizing on this trend. Additionally, traditional domestic IP developers have also entered the RBF market, recognizing its potential for stable cash flow and effective land bank utilization.

 A promising outlook underpinned by attractive valuations

The sector’s valuation remains attractive, with the current P/B ratio below its two-year historical average. This relatively appealing valuation is further supported by the sector’s growth prospects, with the expansion of the land bank not yet factored into the book value. The industrial park real estate sector is well-positioned to benefit from the ongoing reshaping of global manufacturing, offering investors an opportunity to tap into a market with transformative growth potential.