Huge Potential for U.S. Investment in Transport - Aviation Industries

11:25:48 AM | 4/7/2019

The world's No. 1 economy is increasing its investment into Vietnam with a lot of large projects and with a focus on hi-tech industries, transport infrastructure and smart consumption.

As of March 31, 2019, U.S. investors registered to invest US$9.15 billion in Vietnam, ranking 11th among countries and territories investing in the Southeast Asian nation.

In early March, U.S. investors invested US$330 million into Da Nang Hi-tech Park, including Universal Alloy Corporation Asia Pte. LTD (UAC) investing US$170 million in the Danang Sunshine Aerospace Components Factory; Key Tronic EMS spending US$70 million in an electronic equipment manufacturing and assembly plant; and Alton Industry Company pouring over US$87 million to produce air compressors and vacuum cleaners.

Da Nang City leaders said that the city has so far attracted 56 U.S. investment projects with a total registered capital of nearly US$850 million.

In addition, the prospects of Vietnamese and U.S. business cooperation in transport infrastructure are very bright, illustrated by aviation development projects in Vietnam. Mr. Timothy Liston, U.S. Deputy Consul General in Ho Chi Minh City, said that as the U.S. Federal Aviation Administration (FAA) ranked Vietnam’s aviation safety Category 1, along with aviation trade pacts signed during U.S. President Donald Trump’s visit to Hanoi in February, many U.S. aviation groups who are longstanding business partners for Vietnam like Honeywell, Sabre Corporation, Astrophysics, Bechtel Enterprises, Collins Aerospace, Haskell and KPMG, have more business options with the national flag carrier Vietnam Airlines.

U.S. investors also appreciated and were interested in Long Thanh International Airport construction project which costs up to US$16 billion. Airports Corporation of Vietnam (ACV) also planned to spend VND78,000 billion (US$3.4 billion) upgrading 16 airports nationwide. These are golden opportunities for American investors to invest in Vietnam's civil aviation sector in the coming period.

U.S. Ambassador to Vietnam Daniel J. Kritenbrink said the U.S. and international friends as well are seeing Vietnam as one of the fastest-growing economies in the world, and more and more U.S. investors are coming or moving their investments to Vietnam. This is understandable, he said, adding that Vietnam’s exports in global export value chains could reach US$115 billion and its share in global supply chains might climb to US$58 billion. To do this, the Government of Vietnam needs to engage its small and medium enterprises (SMEs) in the globalization process to improve productivity and promote innovation.

However, according to many economic experts, U.S. investment value in Vietnam remains modest relative to both sides’ potential and strengths. In 2018, the U.S. invested US$340 billion overseas, including only US$500 million to Vietnam.

Professor Nguyen Mai said, to attract U.S. investors, Vietnam needs to immediately carry out measures like eliminating tariff barriers, improving the investment environment and streamlining administrative procedures towards European and U.S. standards. In addition, the country must quickly provide a list of suitable investment projects. As soon as Vietnam has good projects for investors, it will become a magnet to more American investors.

However, he warned about frequent intellectual property piracy in Vietnam. This is also a big barrier for U.S. investors to enter the Vietnamese market.

Economist Nguyen Tri Hieu said that, as an economic superpower, the United States will increase investment in the coming time and their deep involvement in the Vietnamese economy is feasible, as the U.S. effort to counterbalance China will provide more investment opportunities for Vietnam.

In the coming time, Vietnam should focus on developing economic backbones such as information technology, automotive technology and high technology which are the strength of U.S. businesses. Thus, the country is highly attractive to them. Vietnam has succeeded in cooperating with major global transcontinental brands of the U.S. such as Intel, Microsoft, Coca-Cola, GE and IBM, but it needs to further tap this advantage to court more U.S. businesses and investment projects.

Anh Phuong