The best place to build a factory in Vietnam is in an industrial park.
An industrial park is a special government-approved area with proper infrastructure (electricity supply, water supply, waste treatment, etc.) for industrial production and incentives for tenants. Some industrial parks have specialization (based on accepted industries) but most of them only have specific environmental standards, and every business that complies with those standards may become a tenant.
There are 2 main options to consider when thinking of a factory workshop:
- Long term lease of land (40-50 years) and building a factory.
- Ready-built factory for lease.
Option 2 (ready-built factory for lease) is very convenient because you receive a completely ready-made workshop (it may have a standard design, or may be custom-built for you) without lots of paperwork and expenses. The industrial park does everything for you – you pay only the regular rental fees according to your agreement.
Industrial parks allow businesses to avoid the upfront expenses related to setting up a factory.
For example, if we need to buy/lease land and build a factory workshop, we will require about 1 million USD more than our current capital requirement (the amount will vary depending on the area, location and construction type).
Usually, in every industrial park, there are a couple of ready-made workshops that you can immediately use. However, if you want the industrial park to build a brand new factory for you it takes only 3 to 6 months, depending on the industrial park and the urgency.
We have visited many industrial parks around Vietnam, especially in the Ho Chi Minh City (HCMC) area.
Though Hanoi is the capital of Vietnam, Ho Chi Minh City is still the main financial, industrial and cultural center of Vietnam. It is the main city for doing business and has very good infrastructure. Most international flights arrive here and it is a good location to export products especially as there is a port right next to the city.
We have previously also considered the Da Nang area where industrial parks and local authorities offer good terms, but we are sure that HCMC is still the best choice.
The overall terms are the same in most industrial parks (investment incentives like tax holidays, etc.) but we needed to choose the best possible option based on:
- Availability of ready-built factories (ready or custom-built)
- Rental fees and terms
- Management level and quality
In the end, we have decided to choose Phuc Long Industrial Park.
It is located near Binh Chanh District of Ho Chi Minh City, in Long An.
What we liked at Phuc Long:
- On-site customs (inside of industrial park)
- All investment incentives (tax holidays, etc.)
- Great support by management
- Quick construction of factories (industrial park belongs to TVP Steel company which produces the main components of buildings right inside the industrial park)
- Good quality of standard workshops (sound and dust insulation, etc.)
- Reasonable prices for leasing and facilities
- Fully developed infrastructure
- Good % of occupation by international companies
- Management board is friendly and flexible
- Turn-key services (paperwork, etc.)
- Good transport infrastructure.
Here are some photos:
Is it the only good industrial park? Of course not. But others have some issues which are not favorable for us: for example, very bad design of standard workshop which can’t be amended (single metal sheet walls, etc.), high rent(especially with very good location), unavailability of ready built factories, bad customer service, bad payment terms, etc.
For the time being, Phuc Long Industrial Park is the best option with quite a low “entrance ticket”. It allows us to quickly start with our minimum production line, and offers us the space to expand in the future.