Haiphong or Ho Chi Minh City (HCMC) —which is the better business location?
It might rain a bit more in Haiphong than in Ho Chi Minh City, but that’s a minor consideration when choosing your manufacturing enterprise’s location!
Leaving aside Vietnam’s overall economic advantages for the moment, choice of a business location anywhere usually revolves
around the following 10 reasons:
1) Government attitude to foreign direct investment
2) Investment opportunities
3) Local taxes and tax incentives
4) Visas and permits
5) General living costs
6) Workforce and wages considerations
7) Intermodal and international transport connections if you export or import
8) Availability and price of land or office space
9) Local demand for the services or products you offer
10) Essential infrastructure to support your business.
Let’s start with some basic facts.
Haiphong — very much an industrial hub and very close to the capital Hanoi—is in the north of Vietnam while HCMC, the largest city in terms of population, is in the south.
HCMC has a population of nearly 8.5 million while Hanoi is home to about 7.5 million people. Haiphong, the country’s third largest city, has a population of over 2 million.
Ho Chi Minh City is the country’s largest economic hub with good workforce availability, rail connections and proximity to seaports. The city’s annual per capita GDP is expected to triple to USD14,300 over the next decade (in 2016 it was USD5,428 and foreign direct investment contributed just under 24%). The target has been set by the city government, which projects 2017 GDP growth in the region of 8-8.5%.
Hanoi is the political centre, home to government and legislative authorities, and in terms of economic growth only just behind HCMC. But that also means lower labour costs. Its geographic location and connectivity to neighbouring countries are excellent. It is very close to China and almost all ASEAN capitals can be reached inside three hours by air.
Its neighbouring port city of Haiphong not only has ample prime industrial zones under full development, but some of the most modern infrastructure in the country, including the 2017-opened Tan Vu–Lach Huyen bridge, the longest sea-crossing bridge not only in Vietnam but in all Southeast Asia.
That bridge directly links DEEP C industrial zones to the brand new Lach Huyen deepsea port, which will be operational in 2018 and, with 14m depth, will be one of the deepest in the country.
In 2016, Haiphong led Vietnam in terms of foreign direct investments at USD2.74 billion, proving its popularity among investors. Factors enhancing that popularity include:
• Ample power capacity, about 50% from renewables
• New road networks and highways between Hanoi and Haiphong and from Haiphong to China, as well as to coastal provinces
• Airport expansion projects in both Hanoi and Haiphong.
If you look at those initial ten reasons for picking a location for your business, HCMC and Hanoi/Haiphong are pretty much a match for the first five. But here at DEEP C Industrial Zones we would argue that HCMC is no match for Hanoi/Haiphong for the second five.
So how to set up a manufacturing company in Vietnam? We’ll tell you in the next blog.