Vietnam currently sits as one of the top 21 largest exporters in the world, of which manufacturing goods account for more than 83% of total value of exported goods in 2017. This number remains relatively high in comparison to India and other ASEAN nations. Export volume of manufacturing goods in Vietnam increased while most of the countries in Asia, including China, suffered a drop in the manufacturing level.
Shifts in trade flows and supply chains due to the US-China trade war have resulted in Vietnam becoming a favoured alternative destination for manufacturers. However, this growing demand also posed some challenges for the local industrial market. Below are key sector areas facing challenges that can also provide potential opportunities for investors and developers.
Agri-processing and agri-logistics
Vietnam’s supply chain from farm to table is weak and a large part of fresh produce perishes while being transported from the farmers to point of distribution or ports. Businesses doing both agriculture processing and manufacturing are facing problems in finding locations due to insufficient supply and applying for licenses. The cost of forwarding freight and trucking is also high.
Specialized zones and agri-industrial parks could be the solution. More cold chain upstream and agri-food logistics and process technology are needed. Often the existing technology is only about management and maintaining consistent qualities. Digitalizing warehouse layout and operations by using artificial intelligence could significantly improve the process. Addressing these inadequacies could not only lower the costs of logistics but improve last mile delivery as well.
Developers could also harness the immense economic potential of industrial parks as incubators. Many of the secondary and primary functions in these industrial parks are properly designed and integrated to serve the business continuity of the end users. These parks can usually be found in provinces and regions that have an equally pro-business, forward thinking government, which is demonstrated by a better infrastructure planning and vision to be a model for the rest of the country.
By focusing on establishing businesses inside industrial parks with strong master planning and quality management, this could result in increased supply chain opportunities. This would also improve the quality and quantity of labour, provide sufficient and stable power and water supply as well as transport and infrastructure.
The scale is not too big for new things to try, so developers can still control it. If it works, they can easily upscale it. If it doesn’t, it’s very easy to make adjustments and keep it on track.