The Middle Class of Vietnam Increased Sharply| ANT Consulting

The top concern of foreign investors seeking to expand their business in Vietnam is the growing middle class, an important part of the Vietnam consumer market.

The middle class is not only an important part of the market, they are becoming the loyal customers of many foreign businesses, operating in all kinds of sectors in Vietnam. According to UPS Vietnam Managing Director, Vietnam’s middle class is buying more and more cross-border goods. This company invests in vehicles to deliver the items that these middle-class customers ordered from US, UK to their houses.

Accordingly, cross-border e-commerce is growing fast. More and more e-commerce companies are sourcing in Vietnam. In contrast, the middle class of Vietnam also shopping online at foreign websites.

According to experts, Vietnamese middle class people have monthly income of 15 million VND (equivalent to about 700 USD) or more. By 2020, the country is expected to have 44 million middle class people. According to the Center for Consumer Studies and Customers of Boston Consulting Group (US), the “middle class and wealthy” of Vietnam are people who earn an average of 714 USD a month or more.

The Brookings Institute studies showed that the growth rate of the Vietnamese middle class in the period from 2005 to 2015 is more than 14% per year. It is estimated that in the period from 2016 to 2020, this number will continue to increase by 4 percentage points, equivalent to over 18% per annum.

Compared with other Southeast Asian countries, the growth rate of the Vietnamese middle class is among the highest. For example, in the period from 2016 to 2020, the middle class in Malaysia and Thailand increased by more than 4%, Indonesia increased by nearly 12%, and Singapore only increased by 3% per year.

By 2015, the total consumption of the global middle class is 34.8 billion USD. Brookings Institute estimates that by 2030, this number will almost double. By 2030, the global middle-class consumption may increase by 29,000 billion USD compared to 2015. The today’s low-income countries such as India, Indonesia and Vietnam will create a market with total consumption increased by 15 trillion USD compared with the current rate.

Not only increasing in number, the change in the money and spending perspectives of the middle class is also an attractive point. This creates a change in many industries, from food to banking.

Vietnamese consumers are changing their lifestyle very fast and they are increasingly willing to spend on large items aimed at improving their lives. According to a Nielsen report, the percentage of people saving money in quarter II/2017 decreased more than 13% from the previous quarter and just behind Thailand, Singapore and Indonesia.

According to PwC Vietnam, the fast-growing middle class in the country will accelerate the demand for more sophisticated banking services, such as insurance through banking and asset management. Along with that, cashless payments will have the opportunity to grow.

Moving from cash payment to cashless is an indispensable trend. We see many banks in Vietnam are shifting their focus to retail banking thanks to the increased spending of young people. The developing technological infrastructure facilitates the transition from a cash economy to a cashless economy.

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Singapore Investment Imprint in Vietnam Industrial Real Estate | ANT Consulting

With the impact of free trade agreements and capital inflows into Vietnam, Vietnam industrial real estate and logistics are the segments that have grown most rapidly recently.

As a multidisciplinary investment group of Singapore, Sembcorp Development entered Vietnam very early. In 1996, Sembcorp shook hands with Becamex IDC Vietnam Company to establish a joint venture: Vietnam – Singapore Industrial Park (VSIP).

Up to now, VSIP has developed a total of 9 VSIP projects across the country, with a total land fund of more than 8,600 ha, providing production infrastructure for nearly 900 enterprises with a total investment of more than 15 billion USD.

In addition to industrial parks, VSIP is also a pioneer in the construction of urban services and commercial areas, which are planned synchronously along the industrial zones. Currently, VSIP has been developing dozens of such projects to serve the community of experts, employees and local workers as well as industrial zones developed by VSIP.

Also coming from Singapore, Ascendas joint venture with Protrade Company to develop and manage the 500-hectare Protrade International Industrial Park in Binh Duong province and Saigon OneHub Project located in Ho Chi Minh City High-Tech Park (SHTP).

The Protrade International Industrial Park project is built according to international quality standards with a centralized wastewater treatment plant, full facilities, complete infrastructure, providing ready-built and custom-built factories.

Meanwhile, OneHub Saigon is a commercial office complex with an area of 12 hectares, located at the gateway of SHTP.

Designed to meet international green standards, the complex is an ideal choice for companies in information technology, high technology and supporting industries…

Many foreign investors are actively looking for investment opportunities in Vietnam’s industrial real estate market. In particular, many investors chose Binh Duong and Dong Nai to establish manufacturing companies, thanks to the availability of a foundation for production development.

Boustead Projects Limited launched its first ready-built factory project in Nhon Trach 2 Industrial Park in 2018. The factory at phase 1 covers an area of 6 hectares, has been designed and built under the supervision of the team of experts. Currently, this investor is implementing phase 2, with many sustainable and environmentally friendly solutions. This phase is expected to complete and welcome tenants in the third quarter of 2021.

In addition, Mapletree Group, another Singaporean investor, owns and manages total assets of more than 1 billion SGD (719.2 million USD) worth of assets in Vietnam, with a section stretches from Hanoi, Ho Chi Minh City, Binh Duong and Bac Ninh, with 8 real estate and logistics projects.

The wave of shifting and expanding production of foreign investors, including Singaporean investors, is opening great opportunities for Vietnam’s industrial real estate.

In particular, the Covid-19 outbreak caused supply chain disruptions and made international investors more interested in expanding plans, setting up company, branches or production facilities in Southeast Asian countries, in which Vietnam is a reasonable investment destination.

According to Senior Director of Savills Vietnam, Vietnam is always an attractive destination for foreign businesses with a young, more mobile workforce than some other countries in the region, reasonable labor costs.

In addition, there are advantages such as infrastructure, seaports, upgraded transportation system, political stability…

According to the latest report of JLL Real Estate Consulting Company (Vietnam), the total leased land area of ​​the southern provinces is at 25,045 ha in the second quarter of 2020. Supply is filling up rapidly due to soaring demand. Land rent in industrial zones averaged 106 USD / m2 / rental cycle, up 9.7% over the same period last year. The rental price of the ready-built factory is stable at 3.5 – 5 USD / m2 / month.

While the pandemic remains a threat, rental negotiations and new requirements are expected to continue to stall until the end of 2020. However, experts say, the market will quickly recover. right after the situation is under control. A strong industrial development base coupled with an ongoing diversified sourcing trend promises to help bring Vietnam to a new level in the industrial property development market.

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Nothing Can Stop Investors Coming to Vietnam | ANT Consulting

Many foreign investors have once again affirmed the attractiveness of Vietnam as an investment destination.

It is no coincidence that the Vietnam Intensive Online Conference, recently held within the framework of Standard Chartered Bank’s ASEAN-focused investment attraction series, took the theme “Vietnam – Rising star”.

A survey showed that 38% of enterprises surveyed said that they would consider expanding their supply chain in Vietnam. This is the highest rate among ASEAN countries.

With strong fundamentals such as a young, dynamic and tech-savvy population, a growing domestic market, a growing middle class and an open economy, Vietnam continues to deliver attractive investment opportunities. However, it is equally important to manage risk especially in understanding business partners through corporate intelligence investigation, background studying, adverse media search.

Many multinational corporations have been interested in establishing business investments in Vietnam in order to take advantage of the close geographical distance and the ability to connect with ASEAN to promote business activities.

According to data provided by the Japan Trade Promotion Organization (JETRO), more than 40% of the total of 3,500 Japanese enterprises surveyed said they were considering expanding operations in Vietnam, to set up company within the next three years.

A Memorandum of Understanding (MOU) has just been signed between the Foreign Investment Agency (Ministry of Planning and Investment) and JETRO. The agreement was awarded in the witness of Vietnam Prime Minister on September 7th 2020, confirming the great efforts of both the Foreign Investment Agency and JETRO in implementing measures to promote Japanese investment in Vietnam.

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