I. Vietnam manufacturing industries overview

Industry is an important economic sector of Vietnam for many years. Until now, it has made the biggest contribution to the state budget and become the main export industry with high growth rate. The structure of Vietnam industries has made positive changes, a number of industries such as electricity, electronics, information technology and telecommunications, energy equipment manufacturing, textiles, footwear, construction ... which have strong development pace, actively contributing to jobs creation, labor restructuring, increasing productivity and improving people's living standards.

Over past 10 years, Vietnam industries has achieved some notable achievements as follows:

- Industry is an increasingly large contributor to the economy. On average, industry accounted for more than 30% of the country's GDP. Industry is also the largest contributor to the state budget.

- Industrial production continued to grow at a fairly high rate. The total industrial production value get increased continuously, on average 6.79% / year.

The processing and manufacturing industries continued to confirm as the bright spot of the Industry sector and the main driving force with growth increase of 12.98%, lower than the growth rate of the same period in 2017 but much higher compared with the growth in 2012-2016 period, contributing 2.55 percentage to the growth rate of total added value of Vietnam economy.

II. Opportunities for industry investment in Vietnam

2.1 More incentive policies for developing domestic supporting industry 

Over past few years, Vietnamese industry has been developing in width orientation, aiming at processing and assembling such as textile and garment, footwear, cars, motorcycles, electrical and electronic equipment, etc. However, a large number of industries in Vietnam such as: electronics, textile and garment, footwear, automobile and motorcycle assembly, etc. do not have enough supporting industries attached, while they depend mostly on imported raw materials, which makes production activities of Vietnam fragmented, passive and costly sometimes.

Although the Vietnamese goverment has oriented and issued many preferential policies for businesses in supporting industries, but these incentives are not specific and do not have outstanding support features. Subjects receiving  most incentives are not domestic enterprises but mainly foreign-invested enterprises (about 70%).

2.2 Processing and manufacturing industries speed up

According to the report of the Ministry of Industry and Trade of Vietnam in 2020, the value added of the whole industry increased by 3.36% over the previous year, higher than the general growth rate of the economy.

IIP (Index of industrial production) of the whole industry increased from 7.4% in 2016 to 9.1% in 2019. In 2020, Vietnam's industry is heavily influenced by the epidemic COVID-19,but the IIP of whole year 2020 got increase at 3.4% compared to 2019.

The industrial share in GDP has continuously increased from 27.1% in 2016 to 28.5% in 2019. In 2020, the share is lower than in 2019 (just reaching 27.54%) due to the impact of the COVID-19 epidemic. Howver, including construction, the share of industry in GDP got increase from 32.7% in 2016 to 34.5% in 2019 and estimatedly at 33.7% in 2020.

The processing and manufacturing industry has become the main growth driving force of the industry. In accordance with the orientation of industry restructuring, the key industries (such as electronics, textiles, footwear ...) which grew at high rate previous year will contribute to the development of Vietnam's economy, create more jobs for the society (an average of 300,000 more per year), raise the rank of the competitiveness of Vietnam's industry worldwide.

2.3 New-generation Free Trade Agreement

Recently, Vietnam has signed and participated in 15 free trade agreements (FTAs), including two new generation free trade agreements as CPTPP and EVFTA, which make Vietnam one of the economy with biggest openned market. The economy has got large openness and trade relations with over 230 markets, including FTA with 60 markets, which creates favorable conditions for Vietnamese businesses to expand markets, connect and participate comprehensively more on the global value chain and production network.

Regarding the e-commerce market, by 2020, about 53% of the population will participate in online shopping. It is expected that in 2020, due to being affected by the COVID-19 epidemic, Vietnam's e-commerce revenue will grow 18% (in 2019 it is 25%), reaching 11.8 billion USD, accounting for 5.5. % of total retail sales of consumer goods and services nationwide.

III. Should rent factories for market penetration, good idea!

With the advantages from many new generation free trade agreement among Vietnam and many markets around the world, investment into manufacturing for Vietnam market and for Free-Trade-Agreement markets is worth being considered by global investors. But in stead of leasing industrial land for 50 years without any sure condition about market, it is suitable for investors to rent factories for initial 5-10 years.

In Vietnam, there are many industrial parks developing ready-built factories for rent with many convenient features. Many industrial properties including facotries for rent, warehouse space for rent in Vietnam now are located outside the outskirts of towns or cities, in close proximity to a skilled workforce and major transport routes. Please understand that the conditions of the local market by researching needs time for bigger money flow into Vietnam, so investors should consider price of renting factory and some vacant warehouses for initial project.

You might want to focus your attention on areas with extra support. For instance, Local Enterprise Association , which are partnerships between local authorities and businesses that determine what the economic priorities are in the area with the logistics and transport sector as a focus for the local region.

You could also look into Enterprise Zones, which are areas where Government incentives are offered to businesses to help your projects start up with advatages of tax. They include simplified planning processes and tax concessions, and some businesses in such zones have even been eligible for 100 percent capital allowances for expenditure on plant and machinery.

So, in case of renting factories or warehouse in Vietnam, contact us: (+84) 948 859 999 for further information.