The development of industrial real estate is acting as a catalyst for Vietnam to attract foreign direct investment (FDI) and support small and medium-sized enterprises (SMEs) in advancing through the global value chain.
Vietnam’s economic transformation continues to gather momentum, positioning the country as a key player in global manufacturing and exports. According to recent World Bank data, manufacturing accounts for 24 per cent of Vietnam’s GDP, placing the nation among the top 10 manufacturing-dependent economies worldwide. The General Statistics Office (GSO) also reported impressive GDP growth of approximately 7.4 per cent in the third quarter of 2024 and 6.82 per cent for the first nine months, compared to the same periods last year.
A significant driving force behind this transformation is FDI. In 2023, Vietnam saw a remarkable 32.1 per cent increase in FDI, the highest growth rate since 2016, according to the GSO. The FDI sector contributed around 22.1 per cent to the country’s GDP and provided employment for 8.5 million workers, or 22.8 per cent of the total workforce.
Industrial real estate development is crucial to attracting further FDI. Vietnam currently hosts 425 established industrial parks, covering around 130,000 ha, with nearly 89,000 ha available for rent. Many operational parks are already experiencing high occupancy rates, with more developments planned to increase available space.
Despite these advances, Vietnam is still in the early stages of establishing itself within the global supply chain. SMEs, which make up about 98 per cent of all businesses in the country, play a vital role in supporting industries and supply chain development. However, their participation in the global value chain remains limited. According to the GSO, only around 5,000 SMEs are engaged in the global supply chain–just 0.001 per cent of the total number of businesses in Vietnam.
To overcome these challenges, Vietnam needs to entice more top-tier vendors to boost its standing in the global electronics supply chain. Industry experts emphasise the importance of creating better conditions for SMEs while drawing in larger companies, or ‘Queen Bees’, to further strengthen the sector.
(Vietnam Investment Review)
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