Viet Nam’s industrial landscape is experiencing a transformative phase as it attracts a “new wave” of high-value investments, marking its evolution into a major manufacturing, logistics, and digital hub in Southeast Asia.
· Driven by competitive operating costs, strategic location, and extensive government investments, the nation is capturing growing interest from global manufacturers and tech leaders.
· This summary covers the major areas shaping Viet Nam’s industrial sector, including foreign direct investment (FDI), infrastructure expansion, and the rise of new high-tech sectors like data centres and electric vehicles (EVs).
· As a leading real estate advisor, Savills Vietnam has released its whitepaper Industrial Insider 2024: New Wave, offering in-depth analysis on the key trends shaping Vietnam's industrial sector. The report covers FDI, infrastructure, and the growth of new technology sectors such as data centres and electric vehicles.
Foreign Investment Surge and Economic Diversification
In the first nine months of 2024, FDI in Viet Nam totalled US$24.8 billion, with high-value industries like electronics, automotive parts, semiconductors, and green technology leading the way. Key investor nations, including South Korea, Singapore, and Japan, highlight a shift toward high-tech, high-value production. Manufacturing accounted for approximately 63% of FDI, emphasising Viet Nam’s appeal beyond traditional low-cost manufacturing.
The North and South Economic Zones (NEZ and SEZ) are primary destinations for this capital. The NEZ, which includes provinces like Bac Ninh and Hai Phong, is known for its strategic location close to China and North Asian markets, benefiting industries focused on exports. In the SEZ, which covers Ho Chi Minh City, Binh Duong, and Dong Nai, strong logistics networks and port access make it ideal for both export and domestic production. Viet Nam’s numerous free trade agreements (FTAs), including those with the EU and the UK, further enhance its attractiveness by providing broad market access and competitive trade advantages.
John Campbell, Director, Head of Industrial Services, Savills Vietnam said: “Overall, Viet Nam’s strong FDI inflows, strategic location, competitive costs, e-commerce growth, trade openness, and role in global supply chains will be essential to the long-term supply and performance of its warehousing segment”
Infrastructure Development: Strengthening the Foundations for Growth
To support the new wave of investments, Viet Nam is heavily investing in infrastructure, allocating 7% of GDP to key projects. Major initiatives include the North-South Expressway, Long Thanh International Airport, and deep-water ports like Cai Mep in Ba Ria-Vung Tau, which will enable direct connectivity with Europe, the Americas, and Southeast Asia.
The NEZ benefits from robust infrastructure, including major highways and ports such as Hai Phong and Lach Huyen, enhancing its appeal for export-driven industries. The SEZ’s extensive port system, led by the deep-water Cai Mep Port, allows direct shipments to global markets and strengthens Viet Nam’s role as a key logistics hub. In addition to physical infrastructure, Viet Nam is advancing its digital connectivity with expanded 5G networks and the development of data centres, supporting the growth of e-commerce and logistics.
High Demand for Warehousing and Advanced Industrial Space
With a strong e-commerce sector and growing FDI, demand for warehousing and ready-built industrial space has surged. In 2024, ready-built factory and warehouse (RB) supply increased by 31%, with occupancy rates exceeding 80% in major zones. The SEZ, with its logistical advantages, is particularly favoured for its competitive costs and strategic location, catering to both domestic and international occupiers.
Warehousing costs in Viet Nam remain attractive, averaging US$5.6 per square metre, appealing to companies using the “China +1” strategy. Developers are responding to demand by introducing modern, high-tech facilities, including eco-friendly options that align with global standards. Government support for logistics, through investments in multimodal transport options and dedicated logistics zones, complements this growth, positioning Viet Nam as a preferred location for efficient and cost-effective industrial solutions.
“Over 44% of new manufacturing FDI capital in 9M/2024 came from value-added products such as electronics and electrical equipment, which perfectly emphasises Viet Nam’s move up the value chain”, according to John Cambell.
Expanding Digital Economy and Data Centre Growth
As the digital economy expands across Asia, Viet Nam is becoming a key market for data centres. Valued at US$685 million in 2023, the data centre market is expected to reach US$1.4 billion by 2029, spurred by rising demand for cloud computing, 5G, and IoT. The government’s Digital Transformation Programme, which aims to have 50% of businesses operating digitally by 2025, underscores its commitment to establishing Viet Nam as a digital hub.
Regulatory changes are encouraging foreign investment in data centres, allowing full foreign ownership in this sector. Companies like ST Telemedia have already partnered with local firms to develop new facilities in HCMC. Viet Nam’s high internet penetration and booming e-commerce sector add to this demand, positioning data centres as a crucial pillar of the country’s economic future.
In 2024, e-commerce revenue in Viet Nam grew by 38%, with platforms like Shopee and TikTok Shop leading in sales. This expansion in online retail further drives the need for warehousing, logistics, and data storage, reinforcing Viet Nam’s role as a rapidly growing digital economy within Southeast Asia.
Sally Tan, Senior Managing Director and Head of Client Solutions, Savills Singapore says, “As one of Vietnam's largest foreign investors, Singapore has contributed to the rapid development of infrastructure, technology and services in Vietnam, actively participating in various sectors such as real estate, retail, manufacturing and renewable energy. This partnership strengthens Singapore's position as a vital conduit for investment flows and business opportunities across Southeast Asia and beyond.”
Ultra summary: Viet Nam’s industrial and digital sectors are thriving, supported by strong FDI inflows, large-scale infrastructure projects, and a favourable regulatory environment. The country’s shift toward high-value-added manufacturing, alongside its expanding logistics and data centre capabilities, is advancing its position within global supply chains.
With its competitive costs, strategic location, and extensive trade agreements, Viet Nam is well-positioned to capture this new wave of investments. As the country deepens its integration into global markets, it is set to play a pivotal role in Southeast Asia’s industrial future, cementing its reputation as an ideal destination for efficient and advanced industrial and logistics solutions.