The Road Ahead Vietnam Logistics

The Road Ahead

Vietnam Logistics

JLL Vietnam

Dec 2020

1. Industrial Market & Domestic Consumption

2. Vietnam Warehouse Market Forecast

3. Supply Chain Network

Table of contents

Industrial Market &

Domestic Consumption

4

© 2020 Jones Lang LaSalle IP, Inc. All rights reserved.

0

10

20

30

40

2011 2012 2013 2014 2015 2016 2017 2018 2019 1H20

Registered capital Implemented capital

Vietnam's FDI by year (USD billion)

Manufacturing

Wholesales and retail

trading

Electricity, gas, steam and

air conditioning supply

Others

Real estate activities

51%

12%

25%

7%

5%

Total Registered Capital by sectors

Source: Ministry of Planning and Investment – Foreign Investment Agency (FIA

Vietnam)

$8.6 bil.▼5% y-o-y

$15.7 bil.▼15% y-o-y

Thailand ChinaSingapore

$5.44 bil.34.7% total investment



Top 3 territories investing in Vietnam

Singapore Thailand China

51%

25%

12%

7%

5%

Southern Vietnam

Petrochemical Complex

Tire manufacturer Radian

Jinyu

Liquefied natural gas

(LNG) power plant

$4 bil.28.8% total investment


$300 mil.11.9% total investment

Top 3 projects investing in Vietnam

1H20 - Vietnam FDI

Vietnam l Industrial Market Snapshot

Southern Key Economic Zone

(SKEZ)

Central Key Economic Zone (CKEZ)

Northern Key Economic Zone (NKEZ)

Ha Noi *

Hai Phong *

Bac Ninh *

Hung Yen *

Hai Duong *Quang Ninh

Vinh Phuc

Map of Key Economic Zone (KEZ) in Vietnam

Thua Thien Hue *

Da Nang *

Quang Nam *

Quang Ngai*

Binh Dinh*

* Provinces covered in the report.

HCMC *

Dong Nai *

Ba Ria-Vung Tau *

Binh Duong *

Long An *

Binh Phuoc

Tien Giang

Tay Ninh

South Vietnam

North Vietnam

Total Ready-Built Factory (sqm) [3]

~ 1,600,000

Total leasable area (ha) [1]

9,371

Average land price

(sqm/lease term) [2]

$99

Occupancy rate (%)

72%

Average Net Rent (sqm/month)

$4.4

Occupancy rate (%)

93%

Total Ready-Built General

Warehouse (sqm)

~ 667,000

Average Net Rent

(sqm/month)

$3.9

Occupancy rate (%)

90%

*NOTE:

[1] The total leasable area of operating industrial parks at a given time according to the master plan.

[2] Net rent is exclusive of VAT and service charges

[3] Included properties within industrial parks only, which developed by both Industrial park developers and sub-developers.

Total Ready-Built Factory (sqm) [3]

~ 3,100,000

Total leasable area (ha) [1]

25,045

Average land price

(sqm/lease term) [2]

$106

Occupancy rate (%)

84%

Average Net Rent (sqm/month)

$4.4

Occupancy rate (%)

91%

Total Ready-Built General

Warehouse (sqm)

~ 2,320,000

Average Net Rent

(sqm/month)

$4.6

Occupancy rate (%)

90%

5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2010 2011 2012 2013 2014 2015 2016 2017

Manufacturing wage in USD/hour

Malaysia Indonesia Philippines Thailand Vietnam China

0

50

100

150

200

250

300

350

2010 2011 2012 2013 2014 2015 2016 2017

Ind

ex b

ased

in U

DS

cu

rren

cy (

Bas

e: 2

010

)

Industrial land price index

Jakarta HCMC Singapore Manila Kuala Lumpur Bangkok

Movement from China

Rising Labour Costs Increasing Land PricesShifting in the Industry

Sector

7

Vietnam has steadily gained share of US containerized import volumes over the last 15 years and until 2018

Country200

3

Country200

5

Country200

7

Country200

9

Country201

1

Country201

3

Country201

5

Country201

7

Country201

8

Vietnam 1% Belg

a 3% Vietnam #53% South Korea

2003 2005 2007 2009 2011 2013 2015 2017 2018

China 25%

17%

6%

4%

3%

3%

3%

2%

2%

2%

2%

2%

2%

1%

1%

1%

1%

1%

China 31%

16%

5%

4%

3%

3%

3%

3%

2%

2%

2%

1%

1%

1%

1%

1%

1%

1%

1%

China 37%

15%

5%

4%

3%

3%

2%

2%

2%

2%

2%

1%

1%

1%

1%

1%

1%

1%

1%

China 36%

16%

4%

3%

3%

3%

3%

3%

3%

2%

2%

2%

1%

1%

1%

1%

1%

1%

1%

China 35%

17%

3%

3%

3%

3%

2%

2%

2%

2%

2%

2%

1%

1%

1%

1%

1%

1%

1%

China 36%

18%

4%

3%

3%

3%

3%

2%

2%

2%

2%

2%

1%

1%

1%

1%

1%

1%

1%

China 35%

18%

4%

3%

3%

3%

3%

3%

2%

2%

2%

2%

2%

1%

1%

1%

1%

1%

1%

China 36%

17%

4%

4%

China 36%

18%

4%

3%

3%

3%

3%

3%

2%

2%

2%

2%

1%

1%

1%

1%

1%

1%

1%

EU EU EU EU EU EU EU EU EU

Brazil Brazil Brazil Brazil Japan South Korea Brazil India India

Japan Japan Japan Japan Brazil Japan India Brazil Brazil

Taiwan South Korea Taiwan South Korea South Korea Brazil South Korea South Kore

South Korea Taiwan South Korea Taiwan India India Colombia Vietnam Vietnam #5Thailand Colombia India Thailand Taiwan Taiwan Japan Japan 3%

3%

2%

2%

2%

2%

1%

1%

1%

1%

1%

1%

1%

Japan

Mexico Thailand Thailand Colombia Thailand Vietnam Taiwan Thailand Thailand

India India Colombia India Indonesia Thailand Vietnam Taiwan Taiwan

Colombia Mexico Indonesia Indonesia Vietnam Indonesia Thailand Indonesia Indonesia

Indonesia Indonesia Chile Chile Colombia Chile Indonesia Colombia Turkey

Chile Malaysia Costa Rica Vietnam Chile Colombia Chile Chile Chile

Costa Rica Chile Malaysia Costa Rica Malaysia Malaysia Mexico Turkey Colombia

Malaysia Australia Australia Malaysia Guatemala Guatemala Malaysia Malaysia Mexico

Australia Turkey Vietnam Guatemala Australia Costa Rica Guatemala Mexico Malaysia

Guatemala Costa Rica Guatemala Australia Costa Rica Mexico Turkey Guatemala Guatemala

Turkey Guatemala Turkey Mexico Mexico Turkey Australia Costa Rica Costa Rica

Honduras Honduras Mexico Honduras Turkey Australia Costa Rica Australia Honduras

Belgium 1% Vietnam Honduras Turkey Honduras Honduras Honduras Honduras Australia

Vietnam #20ium 1% Belgium 1% Belgium 1% Belgium 1% Belgium 1% Belgium 1% Belgium 1% Belgium 1%

© 2019 Jones Lang LaSalle IP, Inc. All rights reserved. 7

Country share of US containerized volumes


In the first half of 2019 Vietnam gained some of China’s share of US containerizedimports

China -3.0%

Germany 3.2 3.3 4.6% 3.7% 3.7% 0.0%

Brazil 2.8 3.0 8.0% 3.3% 3.4% 0.1%

Korea, South 2.7 3.0 8.3% 3.2% 3.3% 0.1%

Vietnam 0.7%

Italy 2.6 2.7 4.3% 3.0% 3.0% 0.0%

Japan 2.4 2.4 -1.3% 2.8% 2.6% -0.1%

Thailand 2.2 2.5 13.6% 2.6% 2.8% 0.2%

Taiwan 2.1 2.3 8.0% 2.4% 2.5% 0.1%

Indonesia 1.9 2.0 3.7% 2.2% 2.2% 0.0%

Turkey 1.6 1.6 5.0% 1.8% 1.8% 0.0%

France 1.5 1.5 0.7% 1.8% 1.7% -0.1%

Spain 1.5 1.5 3.2% 1.7% 1.7% 0.0%

Chile 1.4 1.4 -2.1% 1.7% 1.6% -0.1%

Mexico 1.3 1.4 0.5% 1.6% 1.5% -0.1%

Malaysia 1.2 1.4 21.6% 1.4% 1.6% 0.2%

Colombia 1.1 1.5 29.4% 1.3% 1.6% 0.3%

Netherlands 1.1 1.1 -3.5% 1.3% 1.2% -0.1%

Guatemala 1.1 1.3 23.2% 1.3% 1.5% 0.2%

Costa Rica 0.9 1.0 2.2% 1.1% 1.1% 0.0%

Top 20 Total 70.4 72.4 2.8% 81.3% 80.4% -0.8%

China 31.3 29.8 -4.8% 36.1% 33.1% -3.0%

India 3.7 4.3 15.1% 4.3% 4.8% 0.5%

Vietnam 2.7 3.4 29.0% 3.1% 3.8% 0.7%

Million Metric Tons Share Change in Share

County H1-2018 H1-2019 Growth H1-2018 H1-2019 2019-2018

World 86.6 90.0 3.9%

Change in share of US containerized import volumes:

H1-2019 and H1-2018

The US-China trade war has led many brands to move manufacturing out of China and primarily to Vietnam

From China to.. # of companies

Vietnam 26

Taiwan 11

Thailand 8

Mexico 6

Japan 5

Cambodia 4

India 3

Malaysia 3

Philippines 3

Myanmar 3

USA 3

Bangladesh 2

South Korea 1


Source: Nomura

10

Vietnam

Total 4 existing factories in Vietnam

Latest expansion in 2019:

• Size: 10ha land

• Location: Viglacera IP

Operating multi factories in 3 IPs in

Vietnam since 2018

Latest transaction in 2019:

• Size: 4ha land

• Location: Saigon Hi-Tech Park

Biggest FDI investor in Vietnam with total

registered capital of US$17B

Meeting with Hoa Binh Province authority

for discussion of 1300ha land in 9/2019

A shared industrial platform between

international fund and local developer

Presence in 7 cities with over 380 ha

current land bank since 2018

Biggest local e-commerce group in Vietnam

Largest transaction in 2019:

• Size: >90,000sqm warehouse

• Location: HCMC

First local car manufacturer of Vietnam

Latest transaction in June 2019:

• Size: 50ha of land

• Location: Hai Phong Province

Strong Growth

11

Accelerating structural shifts

E-COMMERCE

STRATEGIES

ADOPTION

Some outsourced

their online

businesses

PHYSICAL STORE

Contactless buying

initiatives, e.g. self-

checkout and

cashless payment

options.

ONLINE SALE

form new digital

habits, and propel

the surge in

online shopping

Vietnam to skip the stage of Mega-mall & move to Omni Channel

The Robust Growth of E-commerce

Source: Statista Digital Market Outlook, Ecommerce report 2019

54.7million

56.7% $2,709million

$49.5

Source: Oxford Economics Source: Deloitte report February 2019- Retail in Vietnam

Notes:

• Online conversion rates: the proportion of visits to online websites that

have been converted to sales.

• *Online conversion index: represents a market’s performance relative

to the overall average conversion rate across all six markets, which

has been assigned a reference value of 1.

NUMBER OF

PEOPLE

PURCHASING VIA

ECOMMERCE

ECOMMERCE

PENETRATION (# OF

PURCHASERS VS

TOTAL POPULATION

TOTAL REVENUE IN

VIETNAM’S

ECOMMERCE 2019

AVERAGE REVENUE

PER USER

1.3

1.1

1.1

0.9

0.8

0.8

0 0.2 0.4 0.6 0.8 1 1.2 1.4

Vietnam

Indonesia

Singapore

Malaysia

Thailand

Philippines

Online conversion index* across six markets in

SEA

37% 39% 41% 44% 47% 50% 51% 52%

0%

20%

40%

60%

80%

100%

2012 2013 2014 2015 2016 2017 2018 2019

Percentage of Internet users in Population

Internet users Non-internet users

Online Conversion RatesInternet Users Shopping Behaviours

13


0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2015 2016 2017 2018 2019 2020F

Projected Vietnam e-commerce revenue per year (USD billion)

Vietnam currently is one of the fastest growing e-commerce markets in South East Asia. Revenues generated

in the e-commerce segment were estimated at USD 4.07 billion in 2015, increasing to USD 6.2 billion in 2017.

By 2020, the market is projected to reach approximately USD 13 billion, double the 2017 level.

The Robust Growth of E-commerce

Vietnam Warehouse

Market Forecast

1. What does an End to End Supply Chain look like?

PLANNING

ForecastDemand

Plan the Supply

DISTRIBUTORS

STORING

STORING

PLANTING

HARVESTING

PACKAGING

PALLETIZING

& STORING

PACKAGING

Example: The Pineapple Supply Chain

MANUFACTURERMANAGING

(Seedlings)

RETAILER

STORING

STORING

SELLING

880.000Total GFA in Northern Region

Sqm 3.033.000Total GFA in Southern Region

Sqm

Total Warehouse Area (GFA, sqm)

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

Bac Ninh Hanoi Hai Phong Hai Duong Hung Yen Binh Duong Dong Nai HCMC Long An

Nothern provinces/cities Southern provinces/cities

Average Net RentFor General warehouse (1H20)

*Factory rent figure covers those projects having this information publicly available only

Source: JLL Research

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Bac Ninh Hanoi Hai Phong Hai Duong Hung Yen Binh Duong Dong Nai HCMC Long An

Nothern provinces/cities Southern provinces/cities

US

D/s

qm

/mo

nth

3.9Northern Region – average rent

USD.sqm/month 3.6Southern Region – average rent

USD.sqm/month

Evolving Logisticss Market

Vietnam Warehouse Market

Source: JLL Research

Note:

• Price/rent comparisons above are for the same product types.

• The above chart is based on assumption made and is not to scale.

• We have adjusted industrial land for Vietnam slightly lower. The rational was that Industrial land offerings in Vietnam to date are not as sophisticated.

Price of factory/warehouse is comparatively higher due to limited available supply and high demand for these two product types.

VIETNAM

Factory

MARKET SOPHISTICATION

PR

ICE

VIETNAM

Industrial land

CHINA (YDR)

Industrial land

CHINA (YDR)

Warehouse

VIETNAM

Warehouse

THAILAND

Factory

THAILAND

Industrial land

THAILAND

Warehouse

SINGAPORE

Industrial land

SINGAPORE

Factory

CHINA (YDR)

Factory

SINGAPORE

Warehouse

The Supply Chain

Efficiency

2. What is Supply Chain Efficiency?

SOURCING MANUFACTURING DISTRIBUTING CustomerRETAILING

Corporates with a physical goods Supply Chain and their warehouses is the primary focus area for JLL SCC

The End to End Supply Chain

SCSTRATEGY

SC PLANNING

Supply Chain Cost Efficiency helps manufacturers optimize the flow of goods from …

transforming raw materials into final products to … delivering to the customer

*Establish, Inc: Logisticss Cost and Service

Report

Transportation

50%

Inventory

Carrying

22%Labour

10%

Customer

Service

8%Rent

4%

Admin

3%

Supplies

2%Other

1%

Real Estate

accounts for <5%

Warehousing

Typical Logisticss Costs (in-house mgmt)*

Supply Chain Costs

3. Why does SCC matter?

Supply Chain Costs comprise majority of Logisticss costs for manufacturers, with warehouse rents

typical

accounting for less than 5%

10

Click&Deliver from DC

(retailer /manufacturer/marketplace)

Replenish

Retailer/3PL DC

Click&Collect from store/3rd partystore

Replenish

Manufacturer Warehouse

Manufacturer forecasts end consumer demand


Mega city Greater city City

City centre

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2015-2019 2015-20192008-2011, 2015-2019

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We’re a world leader in real estate services

2018 revenue

$16.3 billion

S.F. under management

4.6 billion

Employees

90,000

Corporate Offices

313 in 80 countries

Global

26

2008-2019

30 Awards

A Commitment to the Value of Owners and Investors

27

Comprehensive range of services on a local, regional and global scale

Property Types

• Offices

• Industrial properties

• Retail properties

• Residential properties

• Hotels

• Mix-used developments

• Sports facilities

• Culture facilities

• Transportation centers

• Business Parks Strategic Consulting

Capital Markets

Project and Development Management

Project Leasing/Sales

Propertyand AssetManagement

Energy andSustainabilityServices

Valuations

CorporateAppraisal andAdvisory

28

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29

© 2020 Jones Lang LaSalle Property Consultants (India) Pvt. Ltd. All rights reserved.

Jones Lang LaSalle Property Consultants (India) Private Ltd. or any of its employees are not

responsible for any loss, major or minor incurred on the basis of the information provided or are

liable to any damages in any form or shape.

Trang Bui

Head of Market Transactions

+84 28 3911 9399

[email protected]

The Road Ahead Vietnam Logistics

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