HAI PHONG - "THE SHENZHEN OF VIETNAM"
Established as China’s first special economic zone, the rise of Shenzhen in the past two decades is one of the most remarkable success stories in world economic history. Given close proximity to the Chinese border, Hai Phong is set to become a major trades gateway in Northern Vietnam. Supported by an infrastructure boom, incentives to transform its industrial landscape, and strategic position as the North’s largest deep-sea port, Hai Phong has all the right ingredients to spur growth – resembling the success story of Shenzhen.
Resembling Shenzhen’s Success Story
Shenzhen’s GDP has swelled 14-fold in the past two decades, seeing a 14% average growth per year, the third-biggest in China in 2019. Hai Phong, the 3rd largest city in Vietnam, resembles Shenzhen two decades ago. The city’s GDP in 2017 was 4.27X of that in 2003. In 2019, its GRDP increased 16.68% setting a new record high as the top performer across the country during the past three years.
The Shenzhen-Hai Phong Economic and Trade Cooperation Zone is one of the driving forces towards Hai Phong’s emergence as the next Shenzhen. This USD 175 million cooperation zone is a hallmark of Hai Phong’s Chinese-invested projects, set to attract more than USD 100 million of investments and create over 30 thousand jobs when it completes in 2021.
Given its close proximity to China, Hai Phong is connected to Nanning, China, through an expressway. Currently under construction, the Van Don- Mong Cai expressway will shorten the trucking time between Hanoi to Dongxing, China, within 3 hours. The expressway will also connect Hai Phong to Mong Cai and its industrial zones, Van Don International Airport in Ha Long Bay and Dongxing port in China, making delivery of time-sensitive components highly-feasible and cost-effective.
Maritime gateway facilitating land, air and sea transport
Hai Phong has evolved into a core maritime trades gateway. Home to the largest deep-sea port in the North, Lach Huyen is recognized as the strongest potential of Hai Phong since its inauguration in 2018. Manufacturers can reduce transportation costs by processing shipments directly to the USA and Europe. Its cargo throughput has continuously increased to 30 million metric tons per year.
Hai Phong’s upcoming infrastructure backbone includes the expansion of the Cat Bi International Airport. Its passenger and freight volume has steadily increased each year. Post-expansion, the passenger volume will increase to 8 million and freight volume to 250,000 metric tons of cargo, whereby its aviation logistics and contribution to the tourism industry will stimulate Hai Phong’s economic output to new heights.
Foreign and domestic FDI magnet
Hai Phong is transforming into a trade gateway to facilitate world-class land, air, and sea transport. The ratification of the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Trans-Pacific Partnership (CPTPP) will strengthen Vietnam’s economic connections to global supply chains. German car parts maker ZF Friedrichshafen was one of the firsts to relocate to Hai Phong, followed by South Korea electronics manufacturers LG and Samsung and adhesive manufacturer Tesa. Microsoft, Apple, and Sony assembly partner, Pegatron from Taiwan, has plans to invest USD 1 billion into Hai Phong.
Domestic firms are also committing billions to Hai Phong. Vinfast, automotive startup manufacturer and subsidiary of private conglomerate Vingroup, is constructing a large-scale manufacturing plant in Hai Phong to produce cars and electric vehicles. Meanwhile, Vietnamese conglomerates – Vingroup, Sun Group, and Gelexmico will pour USD 1 billion to transform Hai Phong into an international tourism destination – “The Shenzhen of Tomorrow.” Shenzhen’s resale market was the most lucrative property market across China last year. With an extremely tight residential supply and room for growth, Hai Phong’s property market has strong prospects for growth.