Green Industrial Parks: Preparing for the New Investment Wave

Green industrial parks are becoming a key criterion for investors. The new generation of Foreign Direct Investment (FDI) is focusing on green industrial parks, pushing Vietnamese industrial zones to evolve to compete internationally.

Investment Highlights

As of late May 2024, Vietnam boasts 425 industrial zones with approximately 89,200 hectares of industrial land. Of these, 299 zones are operational, attracting significant investment and contributing crucial resources for national economic development. By the end of 2023, industrial zones across Vietnam had attracted over 11,200 foreign investment projects and 10,600 domestic projects, with total investments reaching $251.6 billion and 2.67 trillion VND, respectively. The execution rates of these investments are approximately 68.2% and 45.3%.

Recently, major investors, both domestic and international, including LEGO and Heineken, have shown a keen interest in green manufacturing through the establishment of carbon-neutral factories in Vietnam and the use of renewable energy in their operations. Eco-friendly industrial parks are thus becoming a preferred choice for investors aiming for sustainable development, economic benefits, and adherence to ESG (Environment, Social, Governance) criteria.

Emerging Trends

Truong An Duong, Executive Director of Frasers Property Vietnam, notes that foreign investment in Vietnam has heavily concentrated on manufacturing, increasing demand for industrial real estate and related facilities.

Hardy Diec, CEO of KCN Vietnam, observes that both domestic and foreign investors are increasingly interested in pre-built warehouses and factories. Diec emphasizes that the green trend is significant, with many companies focusing on reducing carbon emissions and contributing to sustainable development.

Paul Tonkes, Deputy CEO of Indochina Kajima Development (ICCK), highlights that investors are prioritizing locations with strong ecosystems where projects can integrate well. He notes that sustainability is becoming a key factor for many customers.

Need for Rapid Transformation

Trang Le, Senior Director of Research and Consulting at JLL Vietnam, emphasizes that while Vietnam has made significant strides in industrial real estate development, it is still in the early stages of implementing eco-industrial models. Challenges include a lack of financial support for green transitions, as initial costs can be high, and the need for more detailed regulations and policies.

Hardy Diec adds that simplifying licensing processes would help attract more multinational companies and improve Vietnam's competitiveness.

Truong An Duong suggests that specialized industrial parks could enhance Vietnam’s role in the global supply chain. Currently, pre-built facilities meet manufacturing needs well, but custom-built options will become more prevalent in the future.

Global Perspective

Comparing with global industrial zones, particularly in China, the trend towards Industry 4.0 and sustainable industrial parks is prominent. Vietnam's industrial zones are transitioning from basic models to more advanced ones.

To advance towards sustainable industrial parks, investment must be made in supporting infrastructure, including warehouses, legal and tax services, banking, housing, schools, research centers, and exhibition facilities to attract experts and investors.

Conclusion

Vietnam's shift towards green industrial parks is crucial for attracting new investment and competing on a global scale. While challenges remain, the ongoing transformation promises significant opportunities for sustainable economic growth.