Chair of the Kinh Bac Urban Development Corporation (KBC) Dang Thanh Tam said its business is going well thanks to the support of the central and local government in land-use purpose conversion, red book granting (land use right certificate), and investment project licensing.

Tam, known as an industrial real estate tycoon, said KBC applies production costs of 10 years ago and builds infrastructure, so it has a great advantage when offering a reasonable leasing fee.

Most investors want to lease 50-100 hectares for their production factories, so KBC has had cash flow since the beginning of the year. The developer has received offers from a number of big international companies, including Apple.

According to Tam, FDI keeps flowing into Vietnam steadily thanks to the government's good policy on attracting foreign investment. 

However, Vietnam is facing a Global Corporate Minimum Tax, which is expected to be applied from 2024. Industrial real estate firms, including KBC, have recently taken part in building social housing for factory workers to strengthen commitments with foreign corporations.

Apple, for example, upon its arrival in Vietnam, wanted to arrange accommodations for its workers to ensure production, and it was reassured that the problem would be solved in one to two years. 

Now KBC is leasing industrial land at higher prices (1.5-2 times higher) and targets hi-tech manufacturers, such as chip manufacturing.

Economic prospects

Tam said Vietnam’s economy is expected to get better as the government plans to develop 1 million social housing products from now to 2030. The public investment has been accelerated. The policies will help accelerate demand and warm up the property market.

Meanwhile, interest rates are decreasing rapidly. Once interest rates go down, the financial market will be more stable.

The failure by KBC to buy back corporate bonds in May is a good signal for the bond market. It shows that some enterprises have healthy financial capability and strong cash flow. The confidence in the bond market has recovered after the one-year crisis.

Sources said the State Bank of Vietnam was considering amending Circular 41 on the capital safety ratio for banks and foreign bank branches. One of the remarkable points is the calculation of the credit risk factor for industrial zone real estate (not the same factor as normal real estate).

Meanwhile, VNDirect Securities has given unoptimistic forecasts. It said that Vietnam’s competitiveness in attracting FDI is weakening compared with other regional countries, while the global minimum tax may make the advantage caused by tax incentives disappear.

Manh Ha