GREEN FACTORY: THE NORTH’S COMPETITIVE ADVANTAGE IN ATTRACTING HIGH-QUALITY FDI

Part I: Strategic Context – Driving Forces for Green FDI in Vietnam

1.1. The Global Argument: The Rise of ESG Standards and Sustainable Supply Chains

The global economy is undergoing a structural transformation. MNCs are no longer making investment decisions based solely on production and labor costs. Instead, ESG factors are becoming a top priority, driven by pressures from stakeholders who are increasingly concerned about climate change and social responsibility.

This shift is evident in the strategies of major technology and manufacturing giants. Samsung Electronics, for example, has committed to achieving net-zero emissions for Scope 1 and 2 by 2030 and expanding its use of renewable energy. Similarly, Apple is committed to becoming carbon-neutral and requires over 110 of its suppliers to transition to 100% renewable energy. Foxconn, a key Apple supplier, has also adopted this trend by establishing an ISO 14001-certified environmental management system and committing to "zero-waste" projects. These actions have created a direct and strong demand for green factories and industrial parks that can meet the stringent ESG requirements of these corporations.

1.2. Vietnam's Strategic Response: From COP26 Commitments to Supporting Policies

Vietnam has made strategic moves to align with this global trend. The country made a strong commitment at the COP26 conference to achieve net-zero emissions by 2050, which was further solidified by the approval of the National Green Growth Strategy for 2021-2030, with a vision to 2050.

To realize these commitments, the Vietnamese government has issued specific incentive policies. For example, "green" or "technology" companies can enjoy significant tax benefits, including a preferential tax rate of 10% for 15 years and a corporate income tax exemption for the first four years. In terms of credit, the State Bank of Vietnam and other financial institutions have promoted green credit policies, offering financial instruments like green loans and green bonds. The combination of political commitment and policy tools has created a strategic shift in how Vietnam attracts FDI. This shows that current investors still have faith in the business environment and are continuously expanding their projects, aiming to attract selective investors focused on quality, high technology, and sustainability.

Part II: In-Depth Analysis – The Northern Industrial Real Estate Market

2.1. Market Assessment: A Comprehensive Picture of Northern Industrial Real Estate

The northern industrial real estate market continues to show strong and stable growth, maintaining its position as one of the country's main manufacturing hubs. The region has a high occupancy rate of approximately 80% and is expected to have a significant new supply of about 500,000 square meters in 2025. Land rental prices have also increased by 9.8% compared to 2023, with an average land rent of about $139 per square meter per lease term. This growth indicates that demand for land and factories in the North remains very high despite macroeconomic fluctuations. The market is forecasted to continue expanding significantly in 2025, with major developers like BWID, LOGOS, SLP, and KCN entering the scene.

2.2. The Difference Between "Green Factories" and "Eco-Industrial Parks"

In a dynamic market, one real estate segment has emerged as a key differentiator: the green factory. A green factory is a facility designed and built to minimize its negative environmental impact by conserving energy and water and using sustainable materials. A higher-level approach is the "eco-industrial park" model, where businesses collaborate to share resources and reuse waste.

This "greening" is measured and certified by international and domestic standards, providing investors with a basis for evaluation and selection. The three most common standards in Vietnam are:

Although the rental prices for green industrial parks like DEEP C (Hai Phong) and VSIP Bac Ninh are within the general market range, they have the ability to attract high-end clients and maintain high occupancy rates. Large FDI corporations, especially those committed to ESG standards, are willing to pay a comparable or slightly higher price to ensure their supply chains are sustainable.

Part III: Tangible Value – Valuation in the Era of Sustainability

3.1. Green Real Estate Valuation: The "Premium" Argument

In-depth studies have shown that green real estate yields a "premium" over traditional assets due to several economic and financial factors. This premium is created by:

3.2. Going Beyond Limits: Integrating ESG into Valuation Methods

Quantifying the exact "premium" of green real estate is a significant challenge. To meet market demands, valuation methods need to be adapted. Several methods are proposed to integrate ESG factors into the traditional valuation process:

• ESG Integration into the Comparative Method: Adjusting the price of comparable properties by adding ESG factors, such as green certification, renewable energy systems, or resource efficiency.
• Income Method: Calculating and integrating the benefits of reduced operating costs and the potential for sustainable rent increases into the project's projected cash flow.
• Cost Method: Quantifying and adding the benefits of green factors (cost savings, risk reduction) to the traditional appraised value.

3.3. The Valuer's Role in Shaping the Market

In this new environment, the valuer's role is no longer just about determining value. Valuers are becoming strategic consultants, serving as a crucial link between a company's strategic goals and its actual financial decisions. Global FDI corporations and investment funds already see ESG as a top strategic factor, but to translate these strategies into real investment decisions, they need a common metric. That metric is valuation. By quantifying the value of ESG factors, valuation helps investors make data-driven decisions, reduce risk, and optimize long-term benefits.

Part IV: Conclusion and Strategic Recommendations

4.1. Summary of Challenges and Opportunities

The shift of FDI capital toward sustainable criteria has created a breakthrough opportunity for Vietnam. With its Net-Zero commitment and specific supporting policies, Vietnam has a strategic advantage in attracting high-quality capital. However, significant challenges remains, such as high initial investment costs, fragmented policies, and the lack of a standardized, reliable dataset.

4.2. Multi-directional Recommendations for Stakeholders

To fully leverage this opportunity and overcome challenges, stakeholders need to take strategic action:

4.3. Vision: Positioning Vietnam as a Top Destination for Green FDI

The green factory is more than just a building solution; it is a strategic tool for Vietnam to realize its Net-Zero commitment and strengthen its position on the global manufacturing map. By focusing on quality, sustainability, and transparency in valuation, Vietnam can position itself not only as a low-cost destination but also as a reliable strategic partner, contributing to a green and prosperous future.