Ho Chi Minh City

Industrial Zones in HCMC: Land of Opportunity

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By: Maxfield Brown, Business Intelligence Associate at Dezan Shira & Associates

Ho Chi Minh City has long stood as a hub for economic activity and a primary attractor of foreign direct investment (FDI) in Vietnam, and guess what? This hasn’t changed. Here are the big numbers: in the first quarter of 2017, FDI investments in the city were up 51 percent over the year prior, amounting to nearly US$600 million total.

There are many reasons for HCMC’s success: an array of logistics links, demographic trends and trade agreements with other countries are all coming together to attract investment. On top of this, and perhaps most importantly, are HCMC’s industrial zones. Right now the city has 19 industrial parks with another eight on the way.

For domestic or international investors setting up in HCMC, industrial parks offer a wide variety of advantages: personal and corporate income tax incentives; improved infrastructure; streamlined compliance requirements; and a range of prefabricated or tailor-made facilities are just some benefits.

Although most industrial zone tenants are domestic companies, today these areas are also highly sought after by multinational enterprises seeking large-scale bases for manufacturing within Vietnam. Some of the heavy hitters? For one, there’s Samsung, which set up a US$2 billion components facility in the Saigon High- tech Park in 2016. And then there’s intel, which established a production facility in 2009 at the same location with a current value topping US$1 billion.

Industrial zones and HCMC’s real estate market

Besides providing good conditions for investment, industrial zones, and the parks within them, often provide opportunities for real estate professionals. After all, building an industrial park also means building roads, utilities networks and other infrastructures. Plus there’s the fact that by supporting investment from small and large investors alike, industrial zones play a significant role in driving demand for residential housing.

With unemployment in HCMC hovering around 2 percent and managerial skills in high demand, new projects in industrial zones are often dependent on workers from other Vietnamese provinces and on managerial staff from abroad. Everyone needs a place to live, and now developers are working to build these affordable housing blocks.

At present, while industrial parks in districts such as tan Phu, district 2 and district 9 are all at full capacity, other areas such as Cu Chi still provide significant potential for future investment.

Keeping costs under control: a constant struggle

If you’re a real estate investor and you want to tap into these opportunities, you should remember: always consider the supply of leasable land in conjunction with the cost of basic materials, wages and the going sale price for real estate within specific districts.

While certain areas within HCMC may be at a relatively low capacity, Vietnam remains one of the most sought-after destinations for investment in the country. As such, leasable land as a whole is in low supply compared to other provinces such as Dong Nai and Binh Duong. Because of this, the minimum leasing rate within HCMC, even within low capacity areas, is near the maximum rate found within other provinces.

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While this certainly allows for increased profit for the landlord, the intense demand for materials and personnel has led to higher wages and price inflation for building materials in recent years. These are constantly shifting and should be monitored closely if you’re looking to construct a new factory or housing complex within the city lines.

Districts to watch

With several new industrial projects in the planning stages in HCMC, we’re expecting to see industrial zones play an even bigger part in the city’s future soon enough. Keep an eye on Binh Chanh, Cu Chi and Nha Be districts, which all have projects in various states of planning.

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With high occupancy rates and the third- highest average rental prices across all districts in HCMC, Binh Chanh, in particular, is well positioned for real estate investment. With over 1000 ha of leasable land expected to come online in the years to come, the potential for this district cannot be understated. Within Binh Chanh, Le Minh Xuan Industrial Park and Vinh Loc I Industrial Park are expected to provide 580 and 466 ha of new land respectively, accounting for the vast majority of new space coming online in the district. For everyone involved, the ongoing development of new industrial park projects will present significant immediate-term contracting opportunities. 

Further downstream, once the listed projects are completed and new workers flood to these areas, we’ll see added pressure on both commercial and residential real estate markets around these areas. However, no matter the location and focus area where real estate investors choose to stake their claim, the impact of industrial zones cannot be discounted. Get ready to see these projects continue to grow HCMC in the years to come.

Editors Note: This article was first published in the May edition of City Pass’ #iAMHCMC Gazette. A full version of the Gazette can be downloaded here


city pass guideThe first newspaper of its kind in Vietnam, #iAMHCMC is a widely distributed print and online publication from the largest travel and living information website in the country, CityPassGuide.com. Innovo JSC, the parent company of both #iAMHCMC and CityPassGuide.com, is a Ho Chi Minh City-based media agency specializing in travel writing, local marketing and quality content creation published across multiple media platforms.

Vietnam Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEANChinaIndiaIndonesiaRussia & the Silk Road. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.

Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Vietnam and the Asian region. We maintain offices in Hanoi and Ho Chi Minh City, as well as throughout China, South-East Asia, India, and Russia. For assistance with investments into Vietnam please contact us at vietnam@dezshira.com or visit us at www.dezshira.com


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Managing Contracts and Severance in Vietnam
In this issue of Vietnam Briefing, we discuss the prevailing state of labor pools in Vietnam and outline key considerations for those seeking to staff and retain workers in the country. We highlight the increasing demand for skilled labor, provide in depth coverage of existing contract options, and showcase severance liabilities that may arise if workers or employers choose to terminate their contracts.

Stuck in Traffic: Opportunities for Urban Infrastructure Development in Ho Chi Minh City

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By Mike Vinkenborg

As Ho Chi Minh City battles growing traffic congestion, municipal authorities are considering a range of measures to improve transportation in the bustling city of over eight million. The city is currently debating altering work hours to spread out traffic during peak hours and trimming sidewalks to create more space for vehicles, while also building several new overpasses. These are just a few of the many proposed measures to tackle the gridlock issue that is becoming increasingly problematic.

These are all short-term solutions that fail to tackle the root of the problem, however. Every day, an estimated of 1,000 new motorbikes and 180 new cars are registered in Ho Chi Minh City. In total, 8.5 million motorbikes and 627,000 cars are currently registered in the city, the latter indicating a 500 percent increase compared with the year 2000. And as Vietnam is set to cut tariffs on ASEAN car imports in 2019, thereby reducing car prices by 42 percent, these numbers are poised to increase even more in the future. As a result, cars on major roads didn’t exceed an average of eight kilometers per hour during afternoon rush hours as of 2010, and the situation has not improved since then.

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TPP Perceptions in Vietnam: Insights from Indochina Research

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By: Erasmo Indolino
Based on survey results by Indochina Research (Vietnam) ltd.

In February 2016, the Trans-Pacific Partnership (TPP) was signed in Auckland, New Zealand. In total, the agreement brings together 12 contracting countries: Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Japan, Peru, the United States, Singapore and Vietnam. Experts consider TPP to be one of the largest trade agreements ever concluded, and its negotiations alone have taken more than seven years to reach an agreed upon text.

If ratified by all members, the TPP could come into force as early as Q1 2018. To facilitate transparent discussions prior to ratification by respective member states, the agreement’s full text was published in November 2015. Since then, Vietnam has rapidly emerged as the agreements’ prime beneficiary, with experts touting the many ways that TPP’s least developed economy can tap demand of larger members.

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Vietnam’s FDI Outlook for 2016: Trends and Opportunities

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By: Dezan Shira & Associates
Editor: Maxfield Brown

Vietnam’s rapid pace of integration into global commerce is likely to yield unparalleled opportunities and record foreign investment in the near to medium term. While speculation on the nature of Vietnamese FDI has been on the rise, the availability of credible data remains scarce.

To help investors make informed decisions about existing opportunities and likely competitors, the following article outlines key findings from some of the first FDI data released by the Vietnamese Ministry of Planning and Investment since the passage of TPPImplementation of the ASEAN Economic Community, and signing of Vietnam’s FTA with the European Union. Published at the end of January, 2016, this data provides insight on sources, destinations, industries, and vehicles of foreign direct investment. Should any questions arise as a result of this presentation, do not hesitate to contact members of our staff at vietnam@dezshira.com or www.dezshira.com.

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Future Merger of HCMC and Hanoi Stock Exchanges Likely as Vietnam’s Markets Mature

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By Edward Barbour-Lacey

HCMC – According to a plan released by Vietnam’s Ministry of Finance, the Ho Chi Minh Stock Exchange (HOSE) and the Hanoi Stock Exchange (HNX) are likely to be merged at the end of this year. If completed, the new Vietnam Stock Exchange (VSE) will be headquartered in Hanoi, although it will also have a southern branch in HCMC.

During the period 2015-2020, the VSE will be a 100-percent state-run unit managed by the Ministry of Finance. After 2020, member securities companies of the VSE will be able to purchase a 10-25 percent stake in the exchange.

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Vietnam to Continue Building Logistics Expertise in Face of Growing Demand

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By Edward Barbour-Lacey

HCMC – Logistics are a key part of any business chain and, as Vietnam’s economy continues on its growth track, demand for logistics services has grown exponentially. Despite some problems, the country is working hard to keep up with the ever-growing logistical needs of businesses operating within the country.

In particular, the high level of foreign direct investment (FDI) into Vietnam’s manufacturing sector has been a strong driver for international transport and logistics services.

With its long coastline, Vietnam naturally leans heavily on sea freight transportation for its export trade. However, airfreight is now also seeing significant growth. All of these logistical options are facing their own challenges as they struggle to modernize and expand quickly enough to handle the growing customer demand.

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Ho Chi Minh City’s Thu Thiem: A Global Urban Development Gem

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By Keith Hilden, Squawkonomics

During our last trip to Vietnam, we were tasked by our crowdfunding clients to find a veritable investment opportunity worth pursuing. We developed some new economic metrics that would better explain the economic phenomenon we encountered in Vietnam.

In November 2014, we documented what struck us as a market phenomenon. In this age of global urbanization, this video shows you how close Vietnam’s tallest skyscraper is to utterly empty fields; surely a phenomenon that will not be around, perhaps anywhere in our world, in 10 years or less.

The mere absence of developed land so close to the Bitexco Financial Tower is of little meaning and value with the proper analytical context, so we at Squawkonomics sought to find a metric that would better be able to measure the market potential of this expanse of land. We came up with a metric, the Land to Skyscraper Index. The land to skyscraper index (or LS Index) simply takes each country’s predominant commercial city’s highest skyscraper, and measures that in turn with the closest occurrence of undeveloped land. What we found was simply striking.

Related Link IconRELATED: Vietnam’s Real Estate Market Set for Growth in 2015

Below are the results we had when we looked at the major commercial cities in Asia. We used a 250 meter standard legend in all of our maps to ensure comparability and integrity of output results.

#1: Ho Chi Minh City, Vietnam

1 - HCMC

You can see very clearly we have selected Ho Chi Minh City as it is the predominant commercial city in Vietnam, and the tallest building is the Bitexco Financial Tower, represented by the blue dot. Very clearly we see a stark contrast between the epicenter of Vietnam’s financial hub and the undeveloped land in eyeshot of the symbolic tower.

#2 Bangkok, Thailand

2 - Bangkok

Below here, we see the surroundings of Bangkok’s Baiyoke Sky Tower, and we see a highly developed urban area, while the open expanses of land we do see are comprised of sport clubs and golf courses. There is very little to no undeveloped land around the Tower.

#3 Kuala Lumpur, Malaysia

3 - KL

Around Kuala Lumpur’s Petronas Twin Towers, we can see a moderate level of development around the towers, while to the Southeast corner, the wide expanse of land we see another golf course. Notice that the only open land is already developed and already designated for a variety of uses.

#4 Singapore, Singapore

4 - Singapore

We see that around Singapore’s UOB Plaza building an assortment of parks, but no undeveloped land around the towering icon.

#5 Ulaanbaatar, Mongolia

5 - Mongolia

Ulaanbaatar’s Blue Sky Tower is again around a generally very well developed area. That open space to the south of the Tower is the country’s National Amusement Park. And that brown area to the south of the main street towards the bottom of the image we find railroad tracks. Hardly a case of particularly underutilized land.

#6 Taipei, Taiwan

6 - Taiwan

Around the Taipei 101, we see a wide open spot to the Southeast, but that land is undeveloped for good reasons: it’s part of Elephant Mountain, with little flat land to encourage large development projects.

#7 Tokyo, Japan

7 - Tokyo

Tokyo, not surprisingly, is highly dense with open spaces near to the Toranamon Hills building being parks and historical sites such as the space at the north of the map, the Three Palace Sanctuaries, and the Hamarikyu Gardens to the east.

#8 Shanghai, China

8 - Shanghai

Around the Shanghai Tower, we see similarly to Tokyo that all opportunity for commercial development is already snapped up, as the area around the tower is pretty much all filled.

#9 Manila, Philippines

9 - Manila

Notice again how Manila’s Gramercy Residences only open spaces are clearly public designated lands such as golf clubs and running tracks.

#10 Pyongyang, North Korea

10 - NK

Pyongyang’s Ryugyong Hotel at first glance appears to be an outlier when the map shows a forest region to the Northwest. Upon a closer look, the rectangular inlet into the forest is actually the National Defense Commission military building, essentially North Korea’s Pentagon. So Kim Jong Un would probably want some undeveloped land and forest around that building: a scant opportunity for property developers there.

#11 Jakarta, Indonesia

11 - JK

Jakarta’s Wisma 46 is surrounded by moderate development. The space is encircled by odd small pockets of relatively undisclosed land. While the area is pocketed with various tiny plots, all large plots are, again, part of a park, or other public designated spaces, generally falling in line with the land to skyscraper index results for almost all of the other cities in the world.

#12 Seoul, South Korea

12 - Seoul

Seoul’s Three International Finance Centre is surrounded by a vigorous and creative use of the land around the skyscraper, with the brown space around the island being a unique ringed park. Notice besides the park space, there is no instances of undeveloped land anywhere.

#13 Vientiane, Laos

15 - Phon Penh

Around Vientiane’s Don Chan Palace in Laos, we see the map pretty much filled up with various development and real estate. That is, except for the sparse southwest corner— past the Mekong River border, which is part of Thailand.

#14 Yangon, Myanmar

14 - Yangon

We find the Pyay Garden Condominiums in Yangon is a slight exception, because the area west of the building is entirely farmland with little else. There is very little to no economic incentive to build significantly out at the west end of the map or beyond, when there is virtually nothing developmentally material to the west of Yangon, with no significant development all the way until the coast at the Bay of Bengal.

#15 Phnom Penh

15 - Phon Penh

The area around Phnom Penh’s Vattanac Capital building is interesting because we do this time see a big space in the middle of the city that appears to be a lake from Bing satellite images. Actually, from the Google Maps satellite image below we can see that the lake is now called the Former Boeung Kak Lake area, and it too, is a very temporary market anomaly as it will most certainly be filled with development projects of many sorts in the few years to come.

15.2 - PP

Phnom Penh has some small areas of relatively undeveloped land on the peninsula island to the East, but the largest residential project ever designed in Phnom Penh is being built right now, called The Bay, a symbol of the city’s ongoing modernization projects.

15.3 - PP

Click here for more investment information about The Bay.

Source: Google Images

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Since there appeared to be an almost universal correlation between the tallest building and no instance of undeveloped land within close proximity of a skyscraper in Asia, upon closer inspection, we discovered that this correlation with skyscrapers and lack of empty land proved also to be true in South Asia, Oceania, North America, South America, Middle East and almost all of Europe and Africa. Please refer to the Squawkonomics website to see our full research methodology and detailed results.

Investment Implications

We can confirm that good land has become extremely precious and a rarity in almost all major commercial cities in the world. Therefore, what we see in Ho Chi Minh City, and to a lesser degree, in Phnom Penh, is a true market alpha anomaly derived from our land to skyscraper index, and a major market signal to invest in these development areas has surfaced accordingly. Equity investors are already sensing this in a macroeconomic sense, as Vietnam is at the front of the pack of the Asia Pacific region in money flows in previous months.

Equity Fund Flow

Source: Zero Hedge

Related Link IconRELATED: Vietnam Loosens Housing Laws for Foreign Investors

Indeed, the market senses a winning play with Vietnam for inward equity flows, and the business leaders that are in charge of transforming Vietnam into a modern economy are not blind to the cards they hold. And the first major foreign investors have moved in, such as Korean giant Lotte partnering with Toshiba and Mitsubishi to build a $2 billion dollar Eco Smart City construction project, launched this March.

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Changes in Vietnam’s legislature and administration of government are going to ensure that this market opportunity will not remain for much longer. Vietnam’s Housing Law has already been legislated into action, and slated to start July 2015. Foreigners will soon be able to directly participate in the development of Vietnam’s newest megacity district, in an area in immediate proximity to Ho Chi Minh’s tallest skyscraper.

Foreigners will also be able to participate by purchasing Vietnamese stocks in the form of the local developers that will be handling this massive modernization transition for Vietnam’s commercial hub. There is also the option of investing in the international companies such as Lotte stepping up to the plate to help build the next economic chapter of Vietnam’s development, and there is always the broader option of investing in a Vietnam ETF such as VNM. There are more surface level events as well as behind the scenes developments going on in the Thu Thiem development area of Ho Chi Minh City, so be sure to keep this area, and its upcoming developments, on your investment radar regarding your Vietnam portfolio.


Squawkonomics is a team of experienced researchers with extensive travel experience in frontier market countries. Clients have relied upon us to get the real bottom line on sectors such as agriculture, mining, real estate, and manufacturing, to name a few. We have delivered on client requests regarding emerging sectors and technologies in frontier markets such as next generation logistics, drone farming, and Bitcoin.

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email asean@dezshira.com or visit www.dezshira.com.

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Tan Cang-Hiep Phuoc Seaport Set to Grow Trade in Southern Vietnam

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HCMC – The Tan Cang-Hiep Phuoc seaport, located alongside the Saigon Premier Container Terminal, commenced operations in December with the arrival of its first container ship, Saigon Bridge. Among its many benefits, the Tan Cang-Hiep Phuoc shipping lanes have shortened the waterway by nearly 30 km, saving two hours in transportation time and halving fuel costs.

Tan Cang-Hiep Phuoc has been strategically located in order to facilitate the connection of the entire southern area of Vietnam. The port will speed up the circulation of goods, saving time and reducing the transportation costs of enterprises located in the area, particularly for those in nearby industrial parks, such as Long Hau Industrial Park.

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Forbes to Honor the 50 Best Listed Vietnamese Companies

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HCMC – In a sign of Vietnam’s maturing market, Forbes Vietnam is preparing to honor Vietnam’s 50 best listed companies in a ceremony to be held on October 17 in Ho Chi Minh City (HCMC). The award seeks to recognize companies listed on the Vietnam Stock exchanges that have outstanding business and financial performance. Some of the recognizable names on the top 50 list include Vingroup, Vinasun, Vinamilk, and Vietcombank.

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Samsung Increases Investment into Vietnam’s Saigon Hi-Tech Park

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By Edward Barbour-Lacey

HCMC – Samsung has recently received an investment certificate allowing the company to move forward with the development of a new US$1.4 billion electronics factory in Ho Chi Minh City (HCMC).  The new factory, which will be called the Samsung CE Complex, will be built in the Saigon Hi-Tech Park. This is yet another move by the South Korean company to turn Vietnam into a global manufacturing base for its products.

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