Foreign firms optimistic about potential of Vietnam's warehouse sector.(Photo: VNA) Hanoi (VNA) – Despite negative impacts of the COVID-19pandemic, Vietnam continues to be an attractive destination for foreigninvestors, especially those operating in the warehouse sector thanks to its advantageof geographical location and skilled labour force, according CEO of BWIndustrial Development JSC Lance Li.
While the pandemic left the world grappling with supply-chain and logisticaldisruptions, the demand for warehouses has soared due to overwhelmed transportnetworks and a surplus of raw materials to ward off inventory shortages, Mingtiandi.com of Thailand quoted Li in its article on November 28 as saying.
The pandemic has certainly led to an unfortunate series of events, however,from a business perspective, it’s been an accelerant for warehouse demand, Lisaid.
With a skilled and relatively inexpensiveworkforce, rapidly improved infrastructure, and a growing number of tradeagreements that Vietnam is a part of, including the ASEAN Free Trade Area, the Comprehensive andProgressive Agreement for Trans-Pacific Partnership (CPTPP), theEuropean Union-Vietnam Free Trade Agreements (EVFTA), and the Regional ComprehensiveEconomic Partnership (RCEP), Vietnam continues to be an attractive destination for foreigninvestment, he stressed.
The growth of e-commerce will lead to an upswing in warehouse demandin Vietnam, which is still in a relatively nascent stage and accounts for only5.5 percent of total retail sales, he said.
Modern, multi-storey warehouses are also on track to be rolled out faster inthe next few years, particularly around Hanoi and Ho Chi Minh City, where landprices are high and strategic locations are in short supply, he said.
Vietnam has been a key beneficiary of the reallocation of manufacturing andsupply chain activities to Southeast Asia, he noted.
The tremendous growthpotential in e-commerce and high FDI influx to Vietnam have given foreigninvestors a lot of confidence, he added.
The demand for warehouses hasskyrocketed in the past time due to the overloaded transport network and anexcess of raw materials to avoid stock shortages.
According to Li, the second year of the COVID-19 pandemic has been an activeyear for BW. At the beginning of 2021, the company witnessed a threefoldincrease in rental enquiries compared with the same period last year.
The company recently closed a dealwith J&T, a company engaged in logistics and package delivery, for a 5hectare warehouse in a strategic location in Ho Chi Minh City.
Meanwhile, WanekFurniture, a key manufacturing company in the supply chain of one of thelargest furniture retailers in the US, Ashley Furniture, leased another 4hectare site from BW in the southern province of Binh Duong.
Market demand skyrocketed in thepast two years, making BW’s factory in VSIP 2A industrial park in the northerncity of Hai Phong is already fully occupied following its constructioncompletion in early June 2021.
The health crisis is an opportunity for manufacturers and warehouse operatorsalike to rethink their inventory strategy, Li said.
ꦜ The global shippingindustry’s lack of containers left warehouses jammed with cargo for quite sometime before exporters were able to load it onto ships, Li said, addingthat these circumstances increased the demand for warehouses like never before./.
