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Logistics Takes Off in Vietnam as E-Commerce Booms, Supply Chains Shift: MTD TV

Logistics Takes Off in Vietnam as E-Commerce Booms, Supply Chains Shift: MTD TV thumbnail




Vietnam’s fast-growing economy and robust e-commerce sector have made the country fertile ground for logistics development, a Hanoi-based executive told MTD TV on Wednesday.

Dongwon Kwak, vice president and head of North at BW Industrial, offered his insights into one of Southeast Asia’s most intriguing markets during a spotlight interview with Mingtiandi founder Michael Cole as part of the ongoing Asia Logistics Investment Forum 2021.

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In the hour-long session, which was sponsored by Yardi, Kwak touched on the trends driving demand for industrial space and made his predictions for the market post-pandemic. From his perch at the warehouse developer set up by private equity giant Warburg Pincus and Vietnamese infrastructure firm Becamex, he’s seen enough data points to appreciate why logistics is having its moment in one of the region’s rising-star economies.

“Vietnam continued its positive economic growth even during the pandemic,” he said, noting that foreign direct investment grew by 18.5 percent year-on-year in the first half of 2021 and that global manufacturers like Samsung and Foxconn have built substantial operations in the country.

Three Demand Drivers

Kwak pointed to three factors driving demand in Vietnam’s budding logistics sector: the stage of the nation’s industrial development, the shift in global supply chains during the US-China trade war, and the e-commerce boom.

Dongwon Kwak, Vice President & Head of North, BW Industrial Development JSC

Dongwon Kwak, Vice President & Head of North, BW Industrial Development JSC

“Vietnam is at the inflection point for manufacturing and logistics industry growth, from my point of view,” he said. “It’s a massive market that is poised to replicate the transformational growth that we witnessed in Japan, in South Korea and most recently in China.”

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The trade row led to widespread relocation of manufacturing in the region as companies sought to diversify their production base, and Vietnam was a key beneficiary of the movement.

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Perhaps more than anything else, the online shopping revolution is creating demand for a warehouse network to serve the country’s estimated population of 98 million.

“Five out of the top 10 most-visited e-commerce sites in Southeast Asia were Vietnamese sites in the year 2020,” Kwak said, citing research by online shopping aggregator iPrice.

Short Turnaround Time

Kwak gave the example of Singapore-based Shopee as a case study of the kind of work BW can do for e-commerce tenants in Vietnam.

Tan Phu Trung BW

A BW facility at Tan Phu Trung industrial park near Ho Chi Minh City

“It took only 10 months from identification of a suitable location to handover of a newly-built facility to Shopee,” he said, putting it down to BW’s depth of understanding in land acquisition and rapport with the relevant local authorities.

Kwak was also quick to credit the company’s partners for helping to smooth the path in Vietnam, where BW has 26 projects in seven provinces. In addition to shareholders Warburg Pincus and Becamex, BW has linked up with Hong Kong-listed logistics titan ESR on a deal to develop and own an industrial park near Ho Chi Minh City.

Looking ahead, Kwak sounded a bullish note for Vietnam’s post-COVID prospects as officials there turn their attention to reopening the country.

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“The government recently launched a very aggressive vaccination programme with a goal of completing vaccination for 70 percent of the whole population either by the end of this year or, at the latest, early next year,” he said, and further plans call for reducing quarantine time to seven days for vaccinated visitors instead of the current 21 days.

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Watch the full discussion above.

Core Strategies Next

The Asia Logistics Investment Forum 2021 continues on 6 July with a panel discussion on core logistics strategies in Asia Pacific, featuring BW Industrial chief executive Lance Li, JLL Asia Pacific capital markets chief executive Stuart Crow, SC Capital chairman Suchad Chiaranussati and Allianz Real Estate Asia Pacific chief executive Rushabh Desai.

A panel on development strategies on 13 July will feature BW Industrial director Michael Chan, JLL capital markets director Priyank Shah, Logos head of strategic customers Peter Garrison, and Jai Mirpuri of ESR.

The final session on 21 July will focus on logistics and e-commerce in mainland China, with appearances by Victor Mok, chairman and chief executive of the asset management platform for GLP China, Cushman & Wakefield head of investors services for Asia Pacific Dennis Yeo, and ESR China chief operating officer Zhou Bo.

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