[Vietnam Biz – Part 4] Land Purchase, Rental, or BTS in Vietnamese Industrial Parks: A Complete Comparison! What Should You Choose? (Part 1)

When entering a Vietnamese industrial park, deciding whether to purchase land ownership, rent a factory, or utilize a BTS (Build to Suit) approach is a critical choice that greatly affects your business strategy. Each option has distinct advantages and disadvantages in terms of building your own facility, initial costs, and operational flexibility.

This article provides a practical comparison of these three options, highlighting key points for selecting an industrial park and tips for using support services to avoid common mistakes.

1. Land Purchase, Rental, and BTS in Vietnamese Industrial Parks: Features and Differences

Manufacturers entering Vietnamese industrial parks have three main options: land purchase (ownership), rental factories, and BTS (Build to Suit). Each option differs in terms of initial investment, risk, and customization flexibility. Choosing the right option depends on your company’s scale, strategy, and budget. Below, we explain the features of each approach and summarize key points for making an informed decision.

• Land purchase is suitable for long-term stable operations.

• Rental factories allow for reduced initial investment.

• BTS offers high customization.

• Selecting based on your budget and growth strategy is essential.

1.1. Land Purchase (Ownership)

Land purchase involves buying land-use rights within an industrial park and constructing your own factory. In Vietnam, as a socialist country, land ownership is limited to a maximum of 50 years, and many industrial parks offer remaining usage periods of about 30–40 years. The minimum lot size is generally 1 hectare (10,000㎡) or more, which can be a challenge for small and medium-sized enterprises.

Land prices in southern Vietnam are roughly 50% higher than in the north. This option is often chosen by companies planning large-scale factories or prioritizing long-term stable operations. Verifying the remaining land-use period is essential.

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1.2. Rental Factories

Rental factories involve leasing standard factory or warehouse units provided by the industrial park for a fixed period. Sizes range from a few hundred to several thousand square meters. Once interior work and equipment installation are completed, operations can start quickly.

Lease contracts are usually for three years or more. Rental factories are ideal for companies that want to minimize initial investment and maintain flexibility for potential withdrawal. However, standard specifications such as ceiling height and floor load capacity may limit customization, so it’s important to confirm compatibility with your equipment and production process.

Advantages and considerations:

• Low initial investment

• Quick startup of operations

• Standardized specifications may impose constraints

• Easy risk management and withdrawal

Rental factories are often selected based on business scale and risk tolerance.

1.3. BTS (Build to Suit)

BTS (Build to Suit) involves constructing a factory or warehouse tailored to the tenant’s requirements. The cost is typically divided over a 5–10 year lease. This option is suitable when unique equipment or specifications are required, which cannot be accommodated by standard rental factories.

BTS is usually used for sites of 1 hectare or more. It allows companies to secure a custom-built facility while reducing upfront costs. This approach is suitable for large enterprises or industries that require advanced production equipment. However, because BTS involves long-term contracts, careful consideration is needed to ensure alignment with your business plan.