Vietnam is seeing the booming development of industrial real estate, with the strongest activity and tailwinds experienced in 25 years. In this trend, market actors are pondering one question: “How can industrial real estate developers draw in large investors?”
The year 2020 witnessed a strong emergence of southern “industrial hubs” such as Binh Phuoc, Tay Ninh, and Vinh Long thanks to their vast land fund and competitive rents compared to those in Ho Chi Minh City, Binh Duong, and Long An.
Seeing a lot of opportunities, localities and industrial parks (IPs) must carefully prepare policies, infrastructure, and services to welcome foreign investors who have strict requirements and stringent appraisal procedures.
Well-planned clean land, synchronous connection, and regulatory transparency
Currently, the land fund in more established industrial hubs such as Bac Ninh and Hung Yen in the north and Ho Chi Minh City, Binh Duong, and Dong Nai in the south is shrinking and rentals are rising. This scarcity is creating great difficulties for investors looking for large land plots to match their production scale.
In particular, when deciding to relocate their production facilities to Vietnam, big investors will not come alone – they will bring their entire supply chain ecosystem in tow. Taking Samsung as an example, the investment shift of this "queen bee" has brought hundreds of foreign suppliers to Vietnam.
Therefore, industrial park developers must have a large, well-planned, and seamless land fund to accommodate a variety of industries and embrace the ecosystem that goes with leading investors.
Moreover, these investors, when entering the Vietnamese market, have a long-term vision. Thus, expansibility is another requirement for land banks to accommodate future expansion plans.
Therefore, new IPs which lie not too far from the centres, have a large seamless land fund, and offer many different options are basking in the attention of investors.
Recently, Japfa Comfeed Vietnam – a member of Singapore-based Japfa Limited –has decided to invest in Minh Hung Sikico Industrial Park in the southern province of Binh Phuoc. The project will construct a series of animal and fish feed production factories and farms, as well as pork and poultry slaughtering and processing facilities, costing more than VND5.3 trillion ($230 million). As a new industrial park (opening for investors in the first quarter of 2020 with a large land fund in the first phase (655 hectares), Minh Hung Sikico IP easily meets Japfa's demand for large coherent land for building adjacent factories in the early phase
Along with the abundant land fund, the ability to accommodate different industries like clean industries, supporting industries, waste gas and wastewater-generating industries to meet environmental standards is creating competitive advantages for Minh Hung Sikico IP to become the No.1 priority for investors seeking for a destination for their supply chain.
Besides, a complete legal status and a separate ownership certificates for each land plot are also advantages Minh Hung Sikico IP offers over its peers. Tenants will easily find solutions of financial leverage and ease off pressures on an investment fund.
Support from the developer
What concern investors most when deciding to invest in a new locality are the legal corridor, the time to complete administrative procedures, worker recruitment, and vendor/supplier availability. Investors not advised by knowledgeable experts will encounter many difficulties and see project timelines extended significantly.
Thoroughly understanding such concerns, Minh Hung Sikico’s great endeavors are initiated to guarantee the internal infrastructure construction schedule and quality and facilitate the availability of Minh Hung Sikico Service Ecosystem to offer Investor Support Services- Solutions upon its inception. All service providers are well selected against premium quality criteria, wholesale price for investor community and local know-how, etc. So that the plant is put into operation as soon as possible.
Supportive local policies
With the motto “The success of the business is also the success of the province”, the government of Binh Phuoc is making efforts to reduce the time for handling administrative procedures and apply the interconnected one-stop service to receive and lodge applications and procedures at the public administrative centres, reducing the time required for approval by a third.
With good planning, full legal titles, professional business support, and investment incentives from the province, Minh Hung Sikico IP has become ideal destination for domestic and foreign investors alike.
To learn more about the implementation of Minh Hung Sikico Industrial Park Project, our reporter has an interview with Mr. Huynh Thanh Chung, Chairman of the board of Directors of Minh Hung - Sikico Industrial Joint Stock Company.
Could you please tell us some remarkable results after two years of implementing the Minh Hung Sikico Industrial Park Project?
After two years, Minh Hung Sikico now has more synchronous infrastructure. According to our schedule, the infrastructure system will be completed by the end of June 2021, including internal traffic system that consists of main roads and internal roads with 4-6 lanes, a power supply system, a water supply plant with a daily capacity of 25,300 cubic meters, a wastewater treatment plant with a daily capacity of 25,000 cubic meters, a fully equipped fire prevent system including hydrants, fire engines, ambulances (fire engine police is also only 5km away from the industrial park). Particularly, the wastewater treatment plant, operated by GS E&C (South Korea), uses environmentally friendly biotech wastewater treatment to complete the first phase by the end of June 2021.
Minh Hung Sikico has now completed all legal procedures regarding land ownership with 100% land lots with an available LUR certificate.
Therefore, although it started attracting investors in the first quarter of 2020, it has so far drawn nearly US$600 million of registered capital, a very encouraging result.
Recently, Binh Phuoc province proposed to the Prime minister to expand three industrial zones by 2,500 ha, especially Minh Hung Sikico Industrial Park by 1,000 ha. What does this adjustment mean for the development of Minh Hung Sikico in the coming years?
The licensed land expansion of 1,000 ha confirmed the prestige of Minh Hung Sikico to investors and Binh Phuoc province, and also demonstrated the enthusiasm and long- term development direction of the company. The well-prepared large-scale investment in Phase 1 for infrastructure and service and initial success created confidence for investors and the Binh Phuoc government to propose to the Prime Minister the second phase investment.
This active approach also helped remove land fund "bottlenecks" in the local business environment, thus helping the local government entice more investors to become an industrialized province by 2025.
Source: Vietnam Business Forum