Comparative Advantage of Vietnam’s Industrial Real Estate vs. Regional Markets

Comparative advantage has become the defining lens through which global manufacturers evaluate new investment locations. In Southeast Asia, Vietnam, Thailand, Indonesia, and Malaysia are competing to attract foreign direct investment (FDI) in manufacturing and logistics. Each country offers unique strengths, but Vietnam’s industrial real estate sector has gained momentum due to its balance of cost, location, and policy incentives.

Cost Competitiveness

One of Vietnam’s strongest comparative advantages lies in operating costs.

• Labor costs in Vietnam are among the lowest in the region, averaging less than Thailand and Malaysia, and remaining competitive even against Indonesia.
• Industrial land rents in Vietnam’s northern hubs such as Hải Phòng and Bắc Ninh are generally more affordable than those in Bangkok or Johor Bahru, while still offering access to high-quality infrastructure.
• Utility costs remain moderate, with Vietnam investing heavily in renewable energy to ensure long-term sustainability.

For manufacturers sensitive to cost, Vietnam’s comparative advantage is clear: it combines affordable labor with competitive real estate prices.

Infrastructure and Connectivity

Thailand is often considered the leader in infrastructure, thanks to its mature highway networks and deep-sea ports like Laem Chabang. Malaysia also benefits from strong logistics systems and a well-developed air cargo network.

Vietnam’s comparative advantage in this area comes from rapid infrastructure development. Northern Vietnam has invested in:

• The Lạch Huyện deep-sea port in Hải Phòng, capable of handling large container ships.
• Expressways linking Hanoi to industrial zones in Hải Dương, Bắc Ninh, and Quảng Ninh.
• Expansions of airports such as Nội Bài (Hanoi) to support cargo and business travel.

While Vietnam is still catching up to Thailand in terms of maturity, its infrastructure growth rate and government-backed investment signal a strong upward trajectory.

Investment Incentives and Policy Support

Indonesia has attracted attention with its policies supporting EV and battery production, while Malaysia continues to promote incentives for electronics and high-tech sectors. Thailand’s Board of Investment (BOI) provides tax holidays and exemptions for priority industries.

Vietnam’s comparative advantage lies in its broad, investor-friendly environment:

• Corporate tax incentives for manufacturing projects in prioritized provinces.
• Reduced land use fees for investors in industrial zones.
• Trade agreements such as EVFTA, CPTPP, and RCEP, providing tariff reductions and wider export access.

For a closer look at how specific industries are benefiting, Core5 has explored the rising role of semiconductor manufacturing in Vietnam, an emerging sector drawing global investors.

Workforce and Demographics

A country’s workforce is central to its comparative advantage.

• Thailand and Malaysia have more experienced workforces in high-tech industries, reflecting their longer history of industrial development.
• Indonesia offers a vast labor pool, but with varied levels of skill development.
• Vietnam provides a young, growing workforce, with strong STEM education and increasing vocational training tailored to manufacturing and logistics.

For industries like electronics, semiconductors, and automotive components, Vietnam’s comparative advantage is its ability to scale up labor supply while improving technical skills.

Sustainability and ESG Alignment

Global investors are increasingly prioritizing sustainability in their site selection process.

• Malaysia and Thailand have begun integrating ESG requirements into industrial parks, particularly in the electronics sector.
• Indonesia has pledged long-term sustainability measures but faces challenges in energy transition.
• Vietnam’s comparative advantage here is the integration of sustainability into new developments, such as LEED-certified warehouses, solar-ready rooftops, and energy-efficient factory designs.

This aligns with global trends highlighted in the World Bank’s report on sustainable growth in Vietnam, where green development is identified as a crucial driver of competitiveness.

Conclusion

When evaluating Southeast Asia’s industrial real estate market, comparative advantage is not about declaring a single winner but understanding trade-offs.

• Thailand offers maturity in infrastructure and industrial clusters.
• Malaysia provides advanced systems and stability for high-tech industries.
• Indonesia brings scale and emerging opportunities in EV supply chains.
• Vietnam, however, balances cost, connectivity, workforce, policy, and sustainability in a way that continues to attract record levels of FDI.

Ultimately, Vietnam’s comparative advantage lies in its ability to combine affordability, rapid development, and global integration—making it a rising hub for foreign manufacturers and investors seeking long-term opportunities in Asia.