Keppel of Singapore targets Vietnamese market amid 'China plus one' shift

Loh Chin Hua, CEO of Keppel Corporation, noted in an interview with Nikkei Asia that businesses have been leaning into a "China plus one" strategy in a bid to diversify investments from the mainland in favour of alternative destinations in order to reduce concentration risks.

He therefore attributed this diversification to trade tensions between the United States and China, as well as the Chinese side’s harsh lockdown policies during the COVID-19 pandemic that hampered industries and prompted investors to think twice about relying too much on the world's second-largest economy.

"There's a lot of activities, manufacturing, where a number of these multinationals - especially tech companies - have started into Vietnam, looking at Vietnam as a possible manufacturing base," Loh said, adding that the company is in a strong position to invest even more into the Vietnamese market.

Nikkei Asia went on to reveal that the company's Keppel Land unit last year announced that its subsidiary Keppel Land Vietnam Properties had struck a deal with Vietnamese firm Phu Long Real Estates Joint Stock Company and its An Khanh New City Development Joint Venture unit in order to acquire a 49% interest in three residential land plots.

Located in Hanoi, the land was acquired for 159.7 million Singapore dollars, equal to US$118 million. Moving forward, Keppel and its Vietnamese partner plan to develop about 1,260 residences comprised of over 1,000 condominium units and more than 200 detached homes for approximately SG$680 million.

The project is part of Mailand Hanoi City and features residential properties, mixed-use complexes, schools, and hospitals. In line with this, Keppel Land has the right of first offer for the project's latter phases.

"Beyond real estate, we also see a lot of opportunities in Vietnam in terms of the energy transition," Loh said, "We are also looking at possibilities of waste-to-energy business in Vietnam and of course data centers, in which the group is quite strong."

Apart from Vietnam, the company is in the process of eyeing other markets in ASEAN as it seeks new assets. "Countries like Indonesia, Thailand [and] Malaysia similarly have also benefitted from rapid urbanization and they have also benefitted from rising affluence, a rising middle class," Loh said.

 "There are good opportunities for investments and for business, certainly in the ASEAN market," he noted.

Keppel, which counts Singapore state investor Temasek as a major shareholder, has a data centre business that focuses on developing and managing facilities across Indonesia, Malaysia, China, and other markets.

The conglomerate is regarded by some as an anchor enterprise that has contributed to Singapore's rapid industrialisation after it became a sovereign state in 1965, alongside other Temasek-backed companies such as Singapore Airlines and telecom group Singtel.