Thua Thien Hue: An Emerging Investment Destination

Central Vietnam is becoming increasingly popular with foreign manufacturers. Thua Thien Hue, in particular, has drawn the attention of a number of international firms. In this article, Vietnam-Briefing looks at why that is.

Thua Thien Hue, a well-established province in central Vietnam, stands out as an appealing investment destination due to its cost-effective labor and enticing incentives. The province boasts numerous industrial zones, well-developed infrastructure, and seaports. It is also in an advantageous position at the gateway to the Mekong sub-region and East Asia, strategically located between the North and South regions of Vietnam.

This part of Vietnam is poised to play a crucial role in Vietnam’s trade and economy moving forward, and with this in mind, foreign firms looking for alternatives to the more well-known manufacturing hubs in Vietnam should consider Thua Thien Hue.

Economy

GRDP growth rate

In 2023, the People’s Committee of Thua Thien Hue Province reported that the GRDP reached US$3.04 billion, marking year-on-year growth of 7.03 percent. The services sector played a pivotal role, making up 48.84 percent of the GRDP, driven by the recovery of the tourism industry. Additionally, the industry and construction sector contributed 31.93 percent, while the remaining portion stemmed from the agriculture, forestry, and fishery sector.

With this figure, Thua Thien Hue maintained its position in the top 10 provinces with the highest growth rates in the Central Coast region.

Export values

In 2023, Thua Thien Hue’s exports amounted to US$1.12 billion. Although there was a slight decrease in year-on-year growth, which is potentially due to increasing difficulties of the global economy, a slow COVID recovery, and ongoing geopolitical conflicts. The figures still represent a positive recovery, surpassing the province’s pre-COVID-19 pandemic export value.

Why Thua Thien Hue?

Labor and wages

According to Vietnam’s General Statistics Office, Thua Thien Hue has a labor force of 597,600 people, and 29.8 percent of them have received some form of training. Despite this, the local demand for skilled labor remains high, and the existing labor pool falls short of meeting the market demand for technical and practical skills.

Although Thua Thien Hue’s population is not as large as other growing provinces like Nghe An or Thanh Hoa, its population growth rate in 2022 was 0.56 percent, ranking 3^rd in the North Central and Central Coastal areas. Additionally, Thua Thien Hue has an immigration rate of 5.3 percent, ranking 2^nd in the region and 9^th nationwide. This ensures a consistent and ample labor supply to meet the increasing demands of foreign investors.

The monthly average wage in Thua Thien Hue is relatively low compared to other cities and provinces such as Hanoi, Hai Duong, Hai Phong, Long An, Ho Chi Minh City, and Binh Duong. In 2022, the average wage was US$244, whereas in other regions, it ranges from US$283 to US$379.

Average monthly wage, Thua Thien Hue vs key manufacturing hubs (US$)

Industrial parks in Thua Thien Hue

Thua Thien Hue has established a conducive regulatory framework to attract foreign investors and businesses, offering legal support in navigating administrative procedures. This is to ensure transparency for businesses looking to enter the market and to improve infrastructure to meet the needs of investors.

Specifically, in 2022, Nguyen Van Phuong Chairman of the Provincial People’s Committee approved the establishment of 4 special inter-sectoral working groups focused on investment promotion and support. These groups, led by People’s Committee leaders, are tasked with overseeing and expediting the implementation of projects in Thua Thien Hue.

Their responsibilities include directing, inspecting, supervising, and resolving issues related to the acceleration of project execution and investment disbursement. The groups also engage in research on legal regulations, proposing solutions to promptly seize investment cooperation opportunities. They also suggest strategies to approach and attract potential investors to key sectors and projects within the province.

Recognizing the province’s potential, numerous industrial park developers have set up businesses in Thua Thien Hue.

Sai Gon – Chan May Industrial Park and Non-tariff zone

Developed by Sai Gon Hue Investment JSC, a member company of Sai Gon Investment Group and a prominent private group specializing in the investment and development of Industrial–Urban –Service complexes, the Sai Gon–Chan May Industrial Park and Non-Tariff zone is a part of the Chan May–Lang Co Economic Zone, covering a total area of 322.3 hectares.

Due to its strategic location within one of Vietnam’s 19 marine economic zones, the leasing period for Sai Gon–Chan May extends to 70 years, compared to the standard 50 years for regular industrial parks.

Sai Gon–Chan May offers both industrial land and ready-built factories. The project holds a crucial position in terms of transportation, situated between two major economic centers, Da Nang City and Thua Thien Hue Province. Additionally, it is in close proximity to the Chan May Deep-water seaport and National Highway 1, facilitating convenient distribution both domestically and internationally.

Phong Dien Industrial Park

Developed by Viglacera JSC, a leading industrial park developer with a profile of 12 industrial park projects, Phong Dien Industrial Park situated along National Highway 1A spans a total area of 284 hectares.

This multi-industry, high-tech mixed industrial park is designed to accommodate low-polluting industries, including electronics, information technology, agro-forestry, seafood processing, food and beverages, textiles and garments, construction materials, mineral exploitation, and processing. The park serves as a focal point for significant FDI projects in Thua Thien Hue, hosting major enterprises such as Scavi and Kalongda.

Gilimex Thua Thien Hue Industrial Park

The Gilimex Thua Thien Hue Industrial Park is a recently developed industrial area situated approximately 2km from Phu Bai International Airport. It is strategically positioned along National Highway 1A, connecting Phu Bai International Airport and Hue City, and serves as the starting point of the East-West economic corridor.

Construction of Gilimex Thua Thien Hue Industrial Park which covers a land area of 460.85 hectares began in 2022, and land handover commenced in Q3 of 2023. The project is expected to attract between 20,000 to 30,000 employees once fully occupied.

Designed to appeal to investors specializing in the production of electronics, computers, optical devices, automotive spare parts, foods and beverages, leather and leather-related products, medical devices, and other products made from non-metallic minerals, Gilimex Thua Thien Hue Industrial Park is poised to play a significant role in the economic landscape.

Investment Incentives of listed Industrial Park

Developing infrastructure

Thua Thien Hue, located in central Vietnam along the East-West economic corridor, the province enjoys a strategic position with an 81km border with Laos and a 120km coastline. Recognizing this advantage, the government has made substantial investments in transportation and logistics infrastructure with the view to positioning the region as the most efficient and direct gateway to the Mekong sub-region and East Asia.

Chan May Deep-water seaport

Located in central Vietnam, Chan May Deep-water Seaport is the first-ranked seaport in Vietnam. It serves as the primary gateway to the East Sea for the Eastern-Western Economic Corridor, linking Central Vietnam to Northeastern Thailand, Laos, and Myanmar.

Annually, Chan May seaport handles about 3.5 million tons of bulk cargo, including coal, clinker cement, wood chips, sand, and tapioca starch. The port can accommodate 50,000 DWT cargo ships, container ships of up to 2,600 TEU, and passenger cruises of 225,282 GRT.

On July 24, 2023, Deputy Prime Minister Tran Hong Ha signed Decision No. 886/QD-TTg, which approves plans, policies, solutions, and resources for implementing the Master Plan for developing Vietnam’s seaport system from 2021 to 2030, with a vision extending to 2050. As part of this plan, Chan May seaport is set to undergo expansion to 702 ha, with a proposed investment of VND750 billion (US$31.25 million) allocated for the construction of port breakwaters in phase 2.

La Son-Tuy Loan Expressway

La Son–Tuy Loan Expressway passing Thua Thien Hue province and Da Nang city is a key component of the North-South Expressway project connecting 63 provinces and cities across Vietnam.

The La Son–Hoa Lien section has been operational since 2022. However, following 18 months of operation, the Prime Minister has approved capital allocation for research and investment to upgrade the La Son–Hoa Lien section. This expansion aims to achieve a roadbed width of 23 meters and introduce four lanes for vehicles.

The Hoa Lien–Tuy Loan section, sanctioned in the second phase of the North-South Expressway, is scheduled for construction in August 2023, targeting operational status by 2025. The initial phase will involve the construction of a four-lane box with a roadbed width of 22 meters and a road surface of 14 meters.

Phu Bai International Airport

Situated along National Highway 1A, Phu Bai International Airport plays a crucial role as a central airport for the region, serving as a gateway to East Asia and other ASEAN countries.

Since 2023, the airport has undergone a tremendous upgrade, including the addition of a second terminal with the capacity to accommodate 5 million passengers annually. This expansion aims to serve 2,500 passengers during peak periods, to attract more tourists and alleviate pressure on the existing T1 terminal.

Investment landscape

Seeing the potential in Thua Thien Hue, investors from various countries and industries have selected the province as their preferred investment destination. In the annual meet-up with foreign investors in Thua Thien Hue province, Phan Quy Phuong Vice Chairman of the People’s Committee shared that in 2023, Thua Thien Hue granted 11 new investment registration certificates for foreign investment projects, totaling US$141.7 million in investment capital. The province currently hosts 126 foreign direct investment projects, with a cumulative registered capital of US$4.5 billion. The FDI sector plays a significant role, contributing over 10 percent to the province’s GRDP and 36.8 percent to the provincial budget.

Thua Thien Hue traditionally recognized for its vibrant tourism sector, also has several major FDI projects. These include:

Laguna Lang Co

Laguna Lang Co stands as Singapore’s Banyan Tree’s first international resort project in Vietnam. Positioned adjacent to Lang Co Bay within the Chan May Economic Zone, the resort is surrounded by a 3-km-long coastline, offering direct views of the East Sea. Construction of the resort started in 2008 on a vast 280-hectare parcel of land, with a capital investment of US$875 million featuring hotels, spas, an 18-hole golf course, a comprehensive shopping center, independent villas, and high-end residential areas.

In 2018, Banyan Tree increased its investment capital to US$2 billion, aiming to introduce casino services to the resort. Accordingly, the project will complete basic construction and commence full operation in 2026.

Aeon Mall Commercial Center

Following the visit of Emperor Akihito and Empress Michiko to celebrate Vietnam–Japan diplomatic relations, Aeon Group started construction on the Aeon Mall Hue Commercial Center, located in the heart of Hue City. The establishment of Aeon Mall Hue is anticipated to play a pivotal role in advancing the socio-economic development of Thua Thien Hue.

In addition to its historical and tourism significance, Thua Thien Hue is also an appealing destination for global manufacturing investors. Notable manufacturing FDI projects in Thua Thien Hue include:

Huda Beer

Founded in 1990, Hue Beer initially operated as a local beer producer. Four years after its founding, the company entered a joint venture with the Carlsberg Group, prompting a rebranding to Huda Beer. In 2011, Carlsberg Group acquired the remaining 50 percent of Huda Beer’s capital, transforming it into a wholly foreign-owned enterprise.

Over the years, Huda Beer has consistently played a substantial role in contributing to Thua Thien Hue’s budget and serves as a key sponsor for the Hue Festival held every two years.

Scavi

Scavi Group, a subsidiary of Financière B’Lao–the world’s leading outsourcing servicer in the lingerie-swimwear industry–first entered Vietnam’s market in 1988. In 2005, Scavi selected Thua Thien Hue as its investment destination and as of today, Scavi operates three factories in Phong Dien Industrial Park, employing over 6,300 workers with an average salary of VND 6.2 million (US$258).

Kanglongda

In 2019, Chinese investor Kanglongda–specializing in manufacturing disposable gloves for the electronics and medical industries–chose Thua Thien Hue as its manufacturing hub. The company plans to establish a factory and a research center for disposable gloves, polyethylene fibers, and multifunctional labor protection gloves, with investment capital of nearly VND 5,000 billion (US$208.3 million). Upon full operation, the project is expected to create job opportunities for approximately 1,500 workers, contributing an estimated annual VND220 billion (US$9.2 million) to the budget.

Conclusion

Thua Thien Hue is strategically positioned to emerge as Vietnam’s next economic hub. Investors aiming to enter the Vietnam market should consider the province’s business-friendly policies, investment incentives, and competitive labor rates when deciding where to establish their operations. They should also consult with the expert at Dezan Shira and Associates to get a more detailed and complete understanding of all Thua Thien Hue has to offer.