Summary: Site selection decisions for a Vietnam factory are often made on a narrow set of visible factors — rental rate, incentive package, distance to a port. A decision that will shape the project for a decade deserves a structured comparison across licensing feasibility, utility capacity, labor availability, logistics and legal risk, not just headline cost. This article sets out a practical scorecard framework for comparing candidate sites.
By ECOVIS Vietnam Law | Last reviewed: 17 July 2026
“Boards approve site decisions based on a one-page summary far more often than they should. A structured comparison across licensing feasibility, utility capacity and legal cleanliness — not just rent and incentives — is what actually protects the decision-maker when a site choice is questioned later.” — Attorney Vu Manh Quynh, Founder & Managing Partner, ECOVIS Vietnam Law
Why This Matters for Foreign Investors / Foreign Companies
A board or headquarters decision-maker comparing three or four candidate sites is typically shown a summary that emphasizes rent, tax incentives and general infrastructure claims. That summary rarely surfaces the factors that most often cause post-signing delay: whether the site’s zoning actually covers the intended activity, whether utility capacity was independently verified, whether the local labor pool matches the required skill profile, and whether the legal and land-title position is clean. A structured comparison forces these factors into the decision before capital is committed, rather than after.
Key Decision Factors
- Licensing feasibility. Does the site’s zoning and environmental approval scope actually cover the intended business line and process type — confirmed, not assumed?
- Utility capacity. Independently verified electricity, water and wastewater treatment capacity against the project’s actual specifications, not marketing claims.
- Labor market fit. Realistic assessment of local labor supply at the required skill level, wage expectations, and recruitment/turnover patterns for the specific industry.
- Logistics access. Actual road, port and airport access relevant to the project’s specific freight profile — including any seasonal or weight-limit constraints.
- Legal and land-title cleanliness. Land use rights status, absence of disputes or encumbrances, and clarity of the landlord’s or developer’s authority to lease.
- Incentive durability. Not all incentive commitments carry the same weight. As a rough risk scale: incentives with a statutory basis that are recorded in the investment registration certificate or a competent authority’s formal decision are strongest; a park management board’s official letter is weaker and depends on that board acting within its authority and consistent with law; verbal assurances or marketing-brochure figures carry the least protection and should not be relied upon as secured.
- Expansion capacity. Availability and terms for future phase expansion at the same site or nearby.
- Governance and reporting fit. Whether the site and structure support the reporting, audit and control requirements the parent company will expect.
Practical Risks for Management
- CEOs risk a board-level decision that looks sound on a cost basis but unravels on licensing or utility grounds after signing.
- COOs risk being handed a site decision made without operational input, then inheriting execution problems the scorecard would have surfaced.
- Boards and headquarters risk approving a project on an incomplete comparison, creating accountability gaps if the site later proves unsuitable.
Practical Action — Using the Scorecard
- Score each candidate site across the eight factors above on a consistent scale (e.g. 1–5), rather than relying on narrative summaries alone.
- Weight the factors according to the project’s actual priorities — a project with a tight timeline should weight licensing feasibility and utility readiness more heavily than incentive value.
- Require independent verification (legal, technical, environmental) for the top two candidates before final selection, not just the winning site after the fact.
- Document the comparison and the decision rationale — this becomes part of the governance record for board and headquarters reporting.
- Cross-reference the top candidate against the checklists in our companion articles on industrial park due diligence and ready-built factory review before finalizing.
How Ecovis Vietnam Law Can Support
Ecovis Vietnam Law supports foreign manufacturers with structured, legally grounded site comparisons — verifying licensing feasibility, utility capacity claims, and land-title status for candidate sites so that the final decision is defensible to the board and headquarters, not just commercially attractive.
FAQ
Should site selection be led by the finance team, operations team, or legal team?
It should be a joint decision informed by all three — cost alone, or operational feel alone, each miss factors the others would catch. A structured scorecard forces this coordination.
How many candidate sites should be compared before a decision?
There is no fixed number, but comparing at least two to three candidates with independent verification of the top choices produces a more defensible decision than evaluating a single site in isolation.
Can incentive packages be relied upon as a stable long-term factor?
It depends on the legal form: incentives recorded in the investment registration certificate or a competent authority’s formal decision are strongest; a management board’s official letter is weaker; verbal or marketing-brochure assurances carry the least protection and should not be treated as secured.
What is the biggest factor investors underweight in site selection?
Licensing feasibility and utility capacity verification are commonly underweighted relative to headline rental cost, despite being more likely to cause delay.
Should the same scorecard be used for a greenfield industrial park site and a ready-built factory?
The same eight decision factors apply, but the supporting due diligence differs — a greenfield site is verified mainly through the industrial park’s own approvals, while a ready-built factory adds the building’s own construction, fire-safety and prior-tenant history.
Call to Action
Request a Site Selection Legal Comparison. Ecovis Vietnam Law helps foreign manufacturers structure and verify site comparisons across licensing feasibility, utility capacity and legal risk before a final decision. Contact us to discuss your shortlist.
Disclaimer
This article is for general information only and should not be treated as legal, engineering or financial advice. Specific site evaluation should be conducted for each project.
