Vietnam has gathered momentum over the past few years to establish itself as the production hub for Southeast Asia (SEA) and now offers a viable alternative for companies looking to establish their operations outside of China.

Vietnam has gathered momentum over the past few years to establish itself as the production hub for Southeast Asia (SEA) and now offers a viable alternative for companies looking to establish their operations outside of China. This is backed by a number of key fundamentals, which includes: strategic location, business friendly environment and competitive labour costs.While Hong Kong's Central area will set you back in occupancy costs of US$338 per square foot, in Taipei premium offices is 80 percent lower, according to JLL data. Or Seoul, where office costs are around 70 percent lower.

With a coastline stretching over 3,200 kilometres along the East Sea, Vietnam's sea transport has been the most prominent mode of freight transportation facilitating international trade, with the port cluster 

In light of this backdrop, JLL released the North Vietnam: A vision for Growth, a paper which will discuss how Hai Phong is gearing up to become an internationally recognized trading hub and a driving force for development in northern Vietnam. 

Location, location, location!

Hai Phong is one of five major municipalities in Vietnam, with direct connection to the central authority. Home to nearly 2 million inhabitants, this is the third largest city in Vietnam, after HCMC and Hanoi. The city's rapid urbanisation has underpinned its exceptional growth over the past five years. Located on the main economic corridor, along the north-eastern coastal area, Hai Phong is set to become the main gateway for import and export for the Northern Region which will provide companies with easy accessibility to transport their goods on a global basis.

Government Support

The central government has shown its commitment to continue Hai Phong's exponential growth by offering numerous special tax incentives, which has paved the way for it to become a foreign investment magnet. The constant improvement of Hai Phong's Provincial Competitiveness Index (PCI) rating demonstrates the authorities continued efforts to enhance the business environment, which will further bolster the attractiveness of Hai Phong. 

Stay Connected

Hai Phong City's infrastructure has undergone significant improvements through the completion of three core projects of Hanoi-Haiphong Expressway, Tan Vu – Lach Huyen Highway, and Dinh Vu – Cat Hai Bridge. By facilitating the linkages to the Hanoi-Lao Cai Express Way, these projects will reportedly help reduce the commute time between the northern province of Lao Cai and Hai Phong International Gateway Port (HIGP) to approximately six hours. 

Industrial Investment Spotlight

Given its proximity to China, being only 200 km from the border, the city is widely regarded as the China+1 manufacturing base in ASEAN to take advantage of China-ASEAN FTA. Hai Phong has been the spotlight for FDI investment, garnering attention and support from the central authority, supported by a major infrastructure boom and numerous governmental incentives. The Hai Phong Economic Zone, which offers companies preferential treatment when they set up operations, is also acting as a catalyst to tempt more investors to the region. 

Mr. Stephen Wyatt, Country Head of JLL Vietnam said "There are many examples of port cities around the world including London and Amsterdam. When developed successfully, they can drive economic activity and serve as a crucial connection between sea and land transport."

"Hai Phong has all the necessary ingredients to develop into a true global port city and with continued investment in the development of new roads, improvement of the city's traffic management system, improvement of rail and inland waterways, increase in labour productivity, efficient custom and administration procedures, development of supporting industries and embracing innovation and technology we firmly believe that Hai Phong has a vision for growth which is set to continue for many years to come." Stephen concluded.

Source JLL