Industrial zone developers adapt amid tariff turmoil

Frasers Property Vietnam’s general manager of Industrial and Residential Truong An Duong believes the US’ decision to temporarily delay new tariffs for 90 days opens a window for negotiations, potentially leading to more reasonable tariff frameworks.

"Across the manufacturing sector, many believe Vietnam stands a strong chance of negotiating moderate tariff levels, giving it a competitive edge over neighbouring countries. As a result, foreign investors are maintaining their interest in the Vietnamese market," Duong told VIR at the Finance and Real Estate Forum held in Ho Chi Minh City on May 8 by Saigon Times Group.

"In the two weeks immediately after the tariffs were announced, we observed a slowdown in decisions from foreign investors at Fraser Property’s industrial parks. However, demand for warehouse and production space has since begun to pick up," he added.

Despite the fallout from the tariffs, Duong believes if Vietnam can secure trade agreements with the US that lead to more reasonable tariff rates, it would present an opportunity to gain competitive advantage over regional peers and entice additional foreign investment.

Truong Khac Nguyen Minh, deputy CEO of Prodezi Long An JSC, noted that foreign investors are hesitant about Vietnam due to the tariffs. Projects closely tied to Chinese supply chains or heavily reliant on the US market are particularly affected.

"Other investors are also becoming more cautious, restructuring portfolios and seeking safer, more flexible locations to mitigate geopolitical and trade risks," said Minh.

In response, Prodezi Long An is staying true to its strategy of sustainable development and value-added offerings. This includes diversifying target clients and investors, balancing inflows from Japan, Europe, South Korea, and ASEAN to minimise market dependency.

The company is also developing eco-centric industrial park models that incorporate environmental, social, and governance standards and circular economy principles, aiming to provide energy-efficient, environmentally friendly production spaces. Enhanced support services, from digital infrastructure and internal logistics to one-stop-shop services and workforce recruitment, are also part of its value proposition.

Tran Manh Hung, chairman of Saigon VRG Investment Corporation, said, "The proportion of goods exported to the US ranges from 10 to 20 per cent. However, most tenants have proactively diversified their markets to reduce dependency on a single export destination."

"Based on our discussions, business operations at our parks remain stable, as reflected in the slight rise in electricity and water consumption in the first quarter. Most of our tenants are large-scale, globally active companies, which gives them greater resilience against tax policy fluctuations," Hung added.

Currently, 15 tenants have either signed or are finalising agreements with the Saigon VRG Investment Corporation. Despite initial concerns, two clients who had paused negotiations following the US tariff announcement have since resumed talks and signed contracts.

Hung noted that the Vietnamese government is actively negotiating with the US to seek a more favourable outcome, one that could ease tariff pressures and support domestic enterprises. His company is closely monitoring these developments to align its next steps accordingly.

Meanwhile, a recent survey conducted by Long Hau Corporation, the investor of the 500-hectare Long Hau Industrial Park in Long An province, revealed that approximately 22 per cent of businesses at Long Hau Industrial Park have been affected to varying degrees, 12 per cent directly and 10 per cent indirectly through supply chain disruptions.

Encouragingly, none of the surveyed firms described the current environment as a 'crisis'. Instead, most are taking a cautious stance, reassessing strategies, and awaiting clearer signals from trade policies and consumer demand.

The majority of tenants in Long Hau are small and medium-sized enterprises engaged in auxiliary manufacturing or domestic-focused operations, rather than large-scale producers of final goods.

Overall, while businesses are clearly more cautious amid tariff headwinds, they are delaying, not cancelling, decisions. Despite ongoing global uncertainties, they remain proactive, helping current tenants maintain stable operations and preparing for the next wave of production relocation.

The eco-centric industrial park Prodezi in Ben Luc district, Long An province. Source: Prodezi Long An

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