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Industrial Real Estate - Overview of foreign direct investment in industrial parks in the first 7 months of 2022

While the industrial real estate sector has experienced fluctuations as a result of the epidemic over the past two years, it has also recorded a number of positive indicators. On the basis of these indicators, experts and real estate market research organizations have indicated that industrial real estate still has a number of potentials in the future, especially in attracting foreign investment (“FDI”) into industrial parks  in Vietnam.

The overview of attracting FDI into Vietnam in the first 7 months of 2022

According to the Foreign Investment Department, as of July 20, 2022, the total registered FDI in Vietnam, including total capital of new registration, adjusted registration and contribution, purchase shares of foreign investors reached nearly 15.54 USD, equaling 92.9% over the same period in 2021. In which,

Regarding the industry, 18 out of 21 national economic industry are invested by foreign investors. Specifically, the processing and manufacturing industry continues to lead the way with a total investment of over 10 billion USD, taking 64.3% of the total registered investment capital. The real estate business ranks second with total investment capital of over 3.21 billion USD, taking nearly 20.7% of total registered investment capital. Next are the professional science and technology activities; information and communication with a total registered capital of nearly 526.2 million USD and 465 million USD. 

Regarding the countries, 88 countries and territories have invested in Vietnam in the first 7 months of 2022. In which, Singapore leads with a total investment capital of over 4.3 billion USD, taking 27.7% of total investment capital in Vietnam. In the South, decrease by 27.3% over the same period in 2021. South Korea ranks second with nearly 3.26 billion USD, taking 21% of total investment capital, increasing by 48.2% over the same period. The Lego project with a total investment of over 1.3 billion USD, Denmark continues to rank third with a total registered investment capital of nearly 1.32 billion USD, taking 8.55% of the total investment capital.

Regarding the provinces, 51 provinces and cities across the country are destinations for foreign investors. Binh Duong leads with a total registered investment capital of nearly 2.6 billion USD, taking 16.7% of total registered investment capital and increasing by 94.9% over the same period in 2021. Ho Chi Minh City ranks second with a total investment capital of over 2.43 billion USD, taking 15.6% of total capital and increasing by 36.5% over the same period. Bac Ninh ranked third with a total registered investment capital of over 1.68 billion USD, taking 10.8% of total capital and increasing more than 2.8 times over the same period in 2021.

Certain new FDI projects in industrial parks in Vietnam by 2022

Source: SSI

Prospects of FDI in industrial parks  in Vietnam

According to SSI Research, in the coming time, industrial parks will attract many FDI enterprises, leading to a positive growth in demand for land rental in industrial parks in Vietnam. Some reasons can include:

• The opening of the route and the application of the vaccine passport to restore the economy helps the contracts signed with MOUs in the past to complete the investment procedures.
• VND - USD exchange rate in Vietnam is more stable than in countries like Indonesia, Thailand, India, Malaysia.
• Vietnam's FDI attraction policies such as corporate income tax exemption to 0% in the first 4 years of operation, 50% corporate income tax reduction in the next 5 years; Incentive policies on social housing for workers in industrial parks as stipulated in Decree 35/2022 and Decree 82/2018/ND-CP will continue to be applied.
• China continues to maintain the Zero-Covid policy, resulting in the shift of production from China to Vietnam.

Along with the Government's implementation of the socio-economic recovery and development program, and the improvement of the business and investment environment, especially the recent promulgation of Decree No. 35/2022/ND-CP dated May 28 on Management of Industrial Parks and Economic Parks, domestic and foreign investment capital flows into industrial parks are promising to continue to increase.

Tran Thi Ngoc Ly (Paralegal)