A phone spare part production line of Samsung Electronics Vietnam (Photo: VNA)Hanoi (VNA) – Vietnam, boasting complete infrastructure, abundantindustrial property on offer and a line-up of inked free trade pacts, is anattractive destination for world’s leading corporations, who are shiftingproduction out of China due to high costs, said real estate consulting companyCBRE Vietnam.
The company reported an increase inproduction shuffle from China to alternative locations in Southeast Asia,including Vietnam, last year, citing the results of a survey conducted inNovember 2018 by the UBS Lab which collected responses from 200 manufacturingcompanies with significant export business or supply to exporters from China.
The survey said key drivers for movingexport production out of China include lower labour cost, lower land cost, lesstrade barriers, easier access to supply chain, better infrastructure and moreindustrial policy support, among others.
According to CBRE, Vietnam may be well placed to benefit from this productionshifting as the Government continues to make heavy investment intoinfrastructure, and help producers get better access to key export markets byparticipating in many bilateral and multilateral trade agreements (FTA).Besides, the country’s sound economic fundamentals like GDP growth, foreigndirect investment and inflation rate become key drivers to Vietnam’scompetitive and land acquisition cost and labour cost.
CBRE experts said that industrial parks in thecountry achieved good occupancy rate of between 70 - 90 percent, andinfrastructure connectivity played a major role in the occupiers’ locationdecision.
Meanwhile, Vietnam has signed many bilateral and multilateral free tradeagreements, comprising five within ASEAN, six others between ASEAN and itspartners including China, the Republic of Korea, Japan, India, Australia andNew Zealand -, and four bilateral free trade deals. As the pacts allow removalof duties among membership countries, they will help foreign manufacturerssetting up production in Vietnam to enjoy tax benefit when they export to thosemarkets.
CBRE’s survey showed thatthe number of factories in Vietnam named in Apple supplier list increased from16 in 2015 to 22 in 2018, all of which are FDI companies. Recently, GoerTek, anApple supplier, decided to move its AirPods production base (wirelessearphones) to Vietnam.
Following the same trend, Samsung Electronics Co., Ltd announced last year thatit would cease operations its mobile phone production plant in China. Currently,29 Vietnamese companies act as Samsung’s Tier-1 supplier. The localisation ratejumped from 34 percent of total product value in 2014 to 57 percent in 2017.
Senior Director and Head of the Research and Consulting Services for CBREVietnam Duong Thuy Dung said that as for the remainder of 2019 and the full2020, there will be an increase in industrial property supply across Vietnam tobenefit from this production shifting from China. -VNA
VNA
