Investing in Bac Ninh – A Top Destination for High-Tech Investment in Vietnam

Investing in Bac Ninh – A Top Destination for High-Tech Investment in Vietnam

Hannah Nguyen

As one of the fastest-growing localities in Vietnam in the last 20 years, Bac Ninh province, located in the Northern Key Economic Region of Vietnam (NKER), has evolved from an agrarian village to a major industrial center with the highest industrial output value nationwide. The province has succeeded in positioning itself as one of the top FDI destinations in the country.

According to the Provincial Competitiveness Index 2020, Bac Ninh was the third most competitive province in Northern Vietnam and among the top 10 most favorable places to do business in the country. As an investment destination, the province is leading in terms of favorable land access, minimal informal charges, and time costs for investors.

Economic Growth

Despite the low gross regional domestic product (GRDP) growth rate in 2020 due to COVID-19, Bac Ninh's average yearly growth from 2016 to 2020 was 6.6%. The industry and construction sector dominated the province's economy, accounting for 75.9% of the local GRDP, while the proportion of the service and agriculture sector stood at 21.3% and 2.8% respectively. The province also ranked first in industrial output value in Vietnam in 2020, with a total value of US$48.9 billion.

Bac Ninh managed to maintain an increasing trade surplus over the past years. It was Vietnam's second-largest exporting province, second to Ho Chi Minh City only, with an export turnover of US$38.9 billion in 2020. Major export commodities of the province include mobile phones, computers, rubber & plastics products, and textile & garment. On the other hand, the greatest import value belongs to raw materials for pharmaceutical production, papers, textile accessories, and electronic components. In the first 11 months of 2021, Bac Ninh’s trade surplus was recorded at US$5.8 billion, with the majority share held by foreign-invested enterprises.

Foreign Direct Investment

Bac Ninh has attracted 1,705 projects with a total registered investment capital of US$20.58 billion by November 2021, making it the seventh-largest FDI recipient in Vietnam. Manufacturing & processing makes up the majority of the foreign investment inflow into the province, accounting for nearly 90% of total invested capital. Of these, electronics is the most important industry, accounting for more than 80% of the total value of industrial production in the province.

So far, the province has attracted investment from 37 countries and territories in the world, with Japan, South Korea, Europe, and the USA being the bigger players in the market. Among the ‘big four’, South Korea has invested over US$10 billion. Some of the biggest FDI projects in Bac Ninh are the Samsung Group’s complex with a total investment of over US$9 billion, the mobile phone assembly and manufacturing project of Foxconn’s Fushan with an investment of US$227 million, and the Canon’s US$130 million project of manufacturing printers and electronic components.

In the first 11 months of 2021, Bac Ninh managed to attract 115 newly registered FDI projects with a total investment flow of over US$527.5 million, an increase of 35% compared to 2020. 80% of new investment projects was posted for the manufacturing businesses.

Labor Force

Although Bac Ninh is the smallest province in Vietnam, it is one of the most populous provinces, with a population of 1.42 million as of 2020. The labor participation rate is relatively high with over 54% of the provincial population are active workforce. Most local workforce specialized in manufacturing businesses.

Labor costs in the area are slightly higher than those in Hanoi with an average salary of US$421/month. As one of the leading FDI destinations in Vietnam, foreign investment has helped transform the region into an industrial hub, making it one of the most competitive hiring markets in the country.

Bac Ninh’s specialization in manufacturing and concentration of supporting industries play a crucial role in improving the quality of its talent pool. Investors working in the province express a higher degree of confidence in the existing labor supply of the province as they are more confident in its vocational training programs there. HR managers and executives, however, should pay close attention to existing clusters of supporting industries and production centers. The supply and skills of workers within close proximity to industrial zones will be higher than in other areas of Bac Ninh. Recruitment usually peaks in the first and second quarters of the year for manufacturing companies.

Infrastructure

Bac Ninh lies on the economic corridor of Nam Ninh – Lang Son – Hanoi – Hai Phong – Ha Long and connects the administrative capital Hanoi with the Northern midland and mountainous provinces. It is 30 km from Hanoi, 45 km from the Noi Bai International Airport, and 110km from Hai Phong, a major industrial city with one of the largest seaports in Vietnam.

Road

The province has more than 4,000 km of roads and is well connected to regional neighboring provinces via the National Highway No. 1A, which connects Ha Noi, Bac Ninh, and Lang Son; National Highway No.18, connecting Noi Bai International Airport with Bac Ninh and Ha Long; and National Highway No. 38, which connects Bac Ninh, Hai Duong, and Hai Phong. The highways are very well connected to provincial and communal roadways.

Besides, the national railway system runs through Bac Ninh to Lang Son in the North leading further to China. The province is well connected through regional river ports and seaports on the Cau River, Duong River, and Thai Binh River.

Industrial Zones

Bac Ninh has 15 industrial parks, ten of which are fully operational with an occupancy rate of 99 percent, spreading over 5,700 ha. The industrial parks in the province have attracted major infrastructure firms such as Vietnam-Singapore Urban and IP Development Joint Stock Company (VSIP), Kinh Bac Urban Development, Viglacera Corporation, and IDICO Corporation who provide infrastructure facilities and services.

Going forward, Bac Ninh continues to rise as an investment magnet for overseas investors. The local authority is pushing for investments in high-tech sectors and environmentally friendly initiatives to ensure long-term prosperity. In general, the province is a desirable site for companies in the electronics, computer technology, infrastructure development, chemical, and industrial automation industries. Furthermore, due to the presence of big manufacturers, supporting industries will find the province to be a good fit.

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