Your project is unique? Let’s talk about it!

Please share with us some details, a SOA expert will get back to you to discuss it in person!

"*" indicates required fields

This field is for validation purposes and should be left unchanged.

Almost there! Last step to be part of the journey:

"*" indicates required fields

This field is for validation purposes and should be left unchanged.

Apply this position

"*" indicates required fields

Accepted file types: jpg, gif, png, pdf, doc, docx, Max. file size: 2 MB.
Accepted file types: jpg, gif, png, pdf, doc, docx, Max. file size: 2 MB.
This field is for validation purposes and should be left unchanged.

In the ever-evolving landscape of Vietnam’s warehousing sector, a remarkable journey unfolds as the industry gears up for substantial growth. With a projected Compound Annual Growth Rate (CAGR) of 11% from 2024 to 2032, Vietnam’s emergence as a global player brings forth unparalleled opportunities for businesses and investors alike. 

Explore the surge in demand for climate-controlled warehouses and the rise of tech-equipped logistics hubs—critical components in Vietnam’s evolving economic ecosystem. With insights into the warehouse landscape and compelling growth drivers for foreign investments, this article serves as your front-row ticket to understanding and capitalising on Vietnam’s booming warehousing sector. 

I. Overview of Vietnam’s Warehouse Landscape 

A. Vietnam Warehousing Market 

Vietnam’s warehousing infrastructure is distributed across key regions: North, Central, and Southern Vietnam. Large warehouses are primarily located near industrial parks and major highways. The strategic placement of warehouses ensures efficient transportation and distribution of goods, contributing to the overall economic development. 

B. What Types of Warehouses are popular in Vietnam? 

Cold Storage Facilities 

Within the overall logistics sector, the cold-chain logistics sub-sector has accelerated strongly in recent years, driven by strong macro drivers which fuel demands not only for capacity but also for more efficient and higher quality logistics. 

The cold warehouse market is forecast to reach US$295MM by the end of 2022 

Vietnam’s cold warehouse

These facilities have become indispensable for preserving perishable goods, ensuring their quality and longevity over extended periods. The top 3 warehouses are located in the South,  account for about 30% of the total cold warehouse capacity (pallets) in 2021.  

Logistics Hubs 

Acting as pivotal nodes in the supply chain, logistics hubs in Vietnam facilitate the seamless movement of goods. The main logistics hubs can be found in the North (Ha Noi – Hai Phong area) and in the South (the wider Ho Chi Minh City area, including Dong Nai province, Binh Duong province and Ba Ria/Vung Tau). As e-commerce and global trade continue to thrive, the importance of logistics hubs in Vietnam’s warehousing landscape cannot be overstated. 

C. Current State of Vietnam’s Warehousing Infrastructure 

Warehouse Occupancy 

In the Vietnamese landscape, the warehouse occupancy rate is a dynamic parameter, currently hovering around 80%. Notably, major urban centers such as Ho Chi Minh City and Hanoi exhibit even more robust rates, reaching 90% and 81%, underscoring the intensity of demand for storage solutions in these bustling metropolises. Nevertheless, a significant portion, approximately 20%, of warehouses across the country remains unoccupied. Geographical variations play a crucial role in this scenario, with the northern regions experiencing comparatively higher vacancy rates. The flourishing e-commerce sector has been a driving force behind the surge in demand for warehouse space, propelled by the country’s rapidly expanding digital economy. Additionally, the influx of Foreign Direct Investment (FDI) and limited availability of modern and technologically advanced warehouse facilities contribute to the intricate tapestry of factors shaping occupancy rates.  

Monthly Average Warehouse Rental Prices 

The cost of warehouse rental is a key consideration for businesses navigating Vietnam’s warehousing frontier. The monthly average warehouse rental prices vary across provinces, reflecting regional economic disparities and logistical considerations. 

Vietnam's warehousing

In the initial seven months of 2021, Ha Noi boasted the top average monthly rental cost for warehouses among the featured provinces, standing at 5.5 U.S. dollars per square meter. Following closely, Ho Chi Minh City secured the second spot in terms of warehouse rental prices. Both Ha Noi and Ho Chi Minh City stood out as regions with highly developed warehousing sectors in Vietnam. 

II. Why you should consider building a warehouse in Vietnam  

Logistics on fast-growing trajectory  

Logistics is one of Vietnam’s fastest growing industries, with growth that may outstrip GDP. In the first three quarters of 2020, the country’s import-export receipts were close to US$390 billion.  

According to the General Statistics Office, this represents a 1.8 percent increase over the same time last year (GSO). By 2025, the Vietnamese government hopes to attain an annual logistics growth rate of close to 20% and lower the logistics costs to 25% to 16% which increase cost efficiency for enterprises.  

The trade war between the United States and China, as well as the epidemic, have compelled firms to diversify their supply chains and transportation networks. As a consequence, during the past several years, enterprises have relocated their operations from China to Vietnam. This is sometimes referred to as the “China plus one” approach. 

Government’s Future Plans for Marine Transportation  

Vietnam’s location provides them with a logistical advantage due to its closeness to China. Vietnam has a lengthy coastline of over 3000 kilometers and a wide network of rivers, giving it tremendous potential for developing its marine transport. 

Vietnam now has 44 major seaports on its marine network. Vietnam, on the other hand, has a lot of smaller ports, bringing the total number of ports in the nation to 320. Cat Lai Port in Ho Chi Minh City is Vietnam’s largest and most modern port. 

There are also plans to increase the country’s marine throughput to more than 1000 tons per year. These initiatives support the government’s goal of reducing the country’s dependency on road networks. Nonetheless, for continued growth, Vietnam’s marine industry would need massive investment. 

Demand for ready-built warehouses is on the rise  

The pandemic accelerated the e-commerce boom and boosted the need for storage space in Tier 2 and Tier 3 cities. These requirements were mainly met by a combination of Grade A, B, and C warehouses (predominantly by B & C grade warehouses). Typically, warehouses are classified according to their building quality, facilities, automation, location, and clients.  

As the economy recovers, the warehouse industry will provide enterprises with little operational interruption and business continuity. Companies are searching for cost-effective logistics and solutions that cater to greater facilities and automation in order to create a smooth supply chain. Across the industry, there is a discernible shift in terms of growth pattern, warehouse occupant preferences, finance, technology, and rent. 

III. Transformative Trends and Innovations Shaping Vietnam’s Warehousing and Storage Industry   

Vietnam’s warehousing and storage industry is expected to grow rapidly in the coming years, driven by the increasing demand for e-commerce, manufacturing, and logistics services. The industry is also undergoing significant changes, as warehouse managers adopt new technologies and practices to improve their efficiency, quality, and customer satisfaction. 

Some of the emerging trends in warehouse management include cloud-based operations management, warehouse automation, omnichannel logistics, simulation, and big data. These trends enable warehouse managers to access real-time data, optimize their operations, reduce costs, and enhance their competitiveness: 

  • Cloud-based operations management allows warehouse managers to monitor and control their operations from anywhere, using any device. This reduces the need for physical infrastructure and enables faster and more flexible decision making. 
  • Warehouse automation involves the use of robots, drones, RFID, and other technologies to automate various tasks, such as picking, packing, sorting, and inventory management. This reduces labor costs, increases efficiency, and improves accuracy. 
  • Omnichannel logistics refers to the integration of various channels, such as online, offline, and mobile, to provide a seamless and consistent customer experience. This requires warehouse managers to coordinate their inventory, order fulfillment, and delivery processes across multiple platforms and locations.  
  • Simulation involves the use of software tools to model and analyze different scenarios and anticipate future needs. This helps warehouse managers to plan ahead, test new strategies, and optimize their performance.  
  • Big data refers to the collection and analysis of large volumes of data to support decision making and optimize performance. This helps warehouse managers to identify patterns, trends, and insights, and to improve their forecasting, demand planning, and inventory management. 

A real-live example of incorporating technological advancements is Sembcorp Industries, a Singaporean-invested firm. The company is set to break ground on the Sembcorp Logistics Park Quảng Ngãi, introducing the first modern ready-built warehouse in central Vietnam. This project incorporates modern warehousing spaces, operational efficiency, and supply chain resiliency. 

In addition to these technological advancements, warehouse managers are also paying more attention to sustainability initiatives, such as reducing energy consumption, waste generation, and carbon emissions. This is driven by the growing awareness of the environmental and social impacts of warehousing and storage activities, as well as the potential benefits of adopting green practices, such as cost savings, improved reputation, and customer loyalty. 

All in all, the outlook of Vietnam’s warehousing and storage industry is positive, as the country is witnessing a growing economy, a rising middle class, and increasing cross-border trade activities. Vietnam is also developing more industrial parks and logistics centers to attract foreign investments and enhance its competitiveness. 

IV. Opportunities for foreign investment: Regulations and Tax Incentives 

As mentioned above, Vietnam’s warehousing sector is one of the most dynamic and promising segments of the country’s industrial market. Therefore, there are many opportunities for foreign investors to enter and expand in this sector, especially if they can leverage the various incentives offered by the Vietnamese government. 

However, first of all, we have to understand how is the Vietnamese regulatory landscape for foreign investors in warehouse sector going. 

Vietnamese regulatory landscape for foreign investors in warehouse sector: 

The Vietnamese government has been gradually opening up its market for foreign investors. According to the Law on Investment 2020, foreign investors can invest in Vietnam in the form of commercial presence establishment, such as joint ventures, 100% foreign-owned enterprises, or public-private partnerships, if the business lines are not prohibited or restricted by the law. The law also provides a detailed list of 25 prohibited business lines and 58 conditional business lines, which apply to both foreign and domestic investors. Some of the conditional business lines that are relevant to the warehouse sector include: 

  • Trading of hazardous chemicals and minerals;
  • Trading of specimens of wild flora and fauna;
  • Trading of firecrackers;
  • Provision of debt collection services;
  • Trading of goods and services subject to special sales tax. 

In addition to the national laws, foreign investors also need to consider the international commitments that Vietnam has made as a member of various bilateral or multilateral agreements, such as the World Trade Organization (WTO), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), or the European Union-Vietnam Free Trade Agreement (EVFTA). These agreements may provide more favorable market access conditions for foreign investors from the member countries, such as higher foreign ownership limits, lower tariffs, or simplified procedures.  

For example, under the WTO Commitment, Vietnam allows 100% foreign ownership in most of the sectors and business lines related to the warehouse sector, such as storage and warehousing services, freight transport agency services, or cargo handling services.  

Therefore, foreign investors need to check the specific commitments that Vietnam has made with their respective countries or regions, as well as the national laws, to determine their eligibility and capability of investing in the warehouse sector in Vietnam. 

Vietnamese incentives for foreign investment in the warehousing sector 

To attract and encourage foreign investment in the warehouse sector, the Vietnamese government offers various incentives, such as preferential tax rates, tax holidays, import duty exemptions, and land rental exemptions. These incentives are granted to both foreign and local investors, based on the location, scale, and nature of their projects. 

The main incentives for foreign investors in the warehouse sector are summarized below: 

  • Preferential tax rates: Foreign investors can enjoy a lower corporate income tax (CIT) rate than the standard 20%, depending on the location and type of their projects. There are three preferential rates: 10%, 15%, and 17%. These lower rates can apply for the entire lifetime of the project or for a limited period, such as 10 years, 15 years, or 30 years. 
  • Tax holidays: Foreign investors can also qualify for a CIT exemption for a certain period, usually four years, starting from the first year of profit making or the fourth year of revenue generation, whichever is earlier. After the tax holiday, foreign investors can also enjoy a 50% CIT reduction for a limited number of years, usually nine years.
  • Import duty exemptions: Foreign investors can import duty-free goods that are used for their fixed assets, such as machinery, equipment, or vehicles, as well as raw materials, supplies, or parts that are used for their projects, subject to certain conditions and procedures.
  • Land rental exemptions: Foreign investors can also benefit from land rental exemptions or reductions for their projects, depending on the location, scale, and duration of their projects. The land rental exemptions or reductions can range from 11 years to 15 years, or even the entire lifetime of the project, for some special cases. 

To enjoy these incentives, foreign investors need to apply for an investment registration certificate and a tax registration certificate from the relevant authorities, and comply with the reporting and auditing requirements. 

In summary, Vietnam’s tax system undergoes regular updates to enhance its attractiveness for foreign investment. With current incentives, strategic location, a competitive workforce, and cost-saving factors, Vietnam is poised to stay a key choice for foreign investment in Asia in the coming years. 

V. Final thoughts 

Vietnam’s warehousing sector stands at the cusp of unprecedented growth, fueled by dynamic trends, technological advancements, and strategic government incentives. As we navigate through the diverse landscapes of cold storage, logistics hubs, and transformative innovations, it’s evident that the sector is not merely evolving but flourishing. Foreign investors are presented with a myriad of opportunities, underpinned by regulatory openness and enticing incentives. With a keen eye on sustainability and an ever-growing economy, Vietnam emerges as a beacon for those seeking to capitalize on the booming warehousing industry in the heart of Asia. The journey has just begun, and the prospects are promising as Vietnam continues to redefine its role in the global supply chain.