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Last updated: Wednesday, November 22, 2017

 

KBC: The Choice of World-leading Corporations

Posted: Thursday, November 09, 2017


In Vietnam, KBC is considered a focal point leading a series of major FDI firms to Vietnam. KBC has contributed significantly to the overall result of FDI attraction of Vietnam for the past 30 years. Vietnam Business Forum has an interview with Mr Dang Thanh Tam, President of the Board of Directors of Kinhbac City Development Holding Corporation, on this issue. Le Sang reports.

Could you please tell us the most remarkable outcomes of 17 years of “business matching mission”?
Right after we were committed to developing industrial park infrastructure, we defined our most important mission of attracting many quality projects, bringing practical benefits for the nation and for localities in which KBC invests. During 17 years pursuing this mission, with our hard work and luck, we have attracted some big projects into KBC-invested industrial parks.

In 2004, following its success with the first factory in Thang Long I Industrial Park, Canon Inc. surveyed the site for its second plant in Vietnam. For Japanese investors, the survey is not just defined to the location, but all of the most detailed issues involved in building a plant. In more than one year, we always received close guidance and active supports and effective coordination from central and local authorities, we proactively negotiated and pledged favourable conditions for the project. As expected, in 2005 Canon decided to invest in building the second facility in Vietnam in KBC-invested Que Vo Industrial Park, Bac Ninh province. The US$60 million project, located on 20 ha of land, manufactures laser printers. Canon was the first major investment project in Que Vo Industrial Park and it opened a prosperous period for KBC as a series of Canon supporting companies arrived in Bac Ninh province and located their projects in Que Vo Industrial Park.

From late 2006 to 2007, Foxconn Technology Group of Taiwan, also known as Hon Hai Precision Industry Co. Ltd, surveyed the Vietnamese market and announced plans to invest US$5 billion in seven localities in Vietnam, including Ho Chi Minh City, Hanoi, Da Nang, Lang Son, Vinh Phuc, Bac Ninh and Bac Giang. Hon Hai selected Que Vo Industrial Park as the first stop to build a US$160 million facility on an area of 12.7 ha to make high-tech products like camera modules and mainboards. This was one of early plans of Foxconn Technology Group to shape IT cities in Bac Ninh and Bac Giang provinces.

In early 2012, LG Electronics Inc., a member of LG Group - one of leading corporations in South Korea, was looking to expand its investment in Vietnam (it built a medium electronic household appliance production plant in Hung Yen province before that). With our prestige and competence in the industrial property market in Vietnam, we approached LG Electronics Inc. and proposed Trang Due Industrial Park in Hai Phong City. After nearly one year of great efforts of KBC and support from central and local governments, LG Group signed a contract to lease 40.2 ha of land in Trang Due Industrial Park (phase 1). With big investment incentives pledged to LG in Hai Phong City, in August 2013, Trang Due Industrial Park was officially approved by the Prime Minister to be part of Dinh Vu-Cat Hai Economic Zone. In September 2013, LG Electronics Vietnam Haiphong (LGEVH) was officially granted the investment certificate by the Hai Phong Economic Zones Authority to invest US$1.5 billion in manufacturing and exporting electronic products and household electrical appliances (refrigerators, air conditioners, TVs, washing machines, vacuum cleaners, car navigation devices and mobile phones).

Continuing the success of the first investment project of LG Electronics Inc. (LGE) in Trang Due Industrial Park, leaders of LG Group together with leaders of Hai Phong City and KBC signed a Memorandum of Understanding (MoU) on investment expansion in Trang Due Industrial Park at LG Headquarters, South Korea in September 2014. And in July 2015, KBC and its subsidiary signed a land lease contract with LGEVH Company under which the latter will rent 37.7 ha in Trang Due Industrial Park (phase 1).

Then, this project of LGEVH was transferred to LG Display Co., Ltd (LGD) with the support of Hai Phong City and KBC to implement a billion-dollar project. LG Display is a world-leading manufacturer of display panels for mobile phones, TVs and computers. LGD planned to build a US$1.5 billion facility to produce high-tech display, which was expected to hire 6,000 labourers and 40 ha of land.

In July 2015, LGD surveyed a number of industrial parks in northern Vietnam. It showed particular interest in Trang Due Industrial Park and the 37.7 ha land transfer plan that LGEVH signed to hire in July 2015.

KBC hosted many meetings with LGD and accompanied it at working sessions with Hai Phong City and the Ministry of Planning and Investment of Vietnam. LGD officially decided to re-lease Lot E (37.7ha) that LGEVH had hired. In May 2016, LGD started construction of LG Display Vietnam Hai Phong plant in Trang Due Industrial Park under the witness and support from the top leader of the Government of Vietnam and leaders of ministries, agencies and localities.

2016 marked the investment boom at Trang Due Industrial Park when it drew a series of major projects from South Korean investors, mainly LG companies, including LG Innotek (US$550 million), LG International, LG Chemical, Haengsung Electronics (US$100 million) and Heesung Electronics (US$154 million), bring the name and rank of Trang Due Industrial Park to the top of northern industrial parks. And, KBC was approved in principle to deploy the third phase of investment (700 ha) of Trang Due Industrial Park. In 2016, the industrial park attracted US$2.5 billion of FDI capital, accounting for 10 per cent of Vietnam’s total FDI value. Trang Due Industrial Park was honoured to receive the Emulation Flag for performance from the Government of Vietnam.

In addition, in 2016, Quang Chau Industrial Park in Bac Giang province signed many big contracts with foreign investors, including JA Solar (the world's largest manufacturer of solar cells) registering to invest US$280 million and lease 40 ha of land, and Luxshare (a subcontractor for Apple Inc.) registering to invest US$70 million and hire 14 ha of land. Particularly, ZhongYiFeng Group, among top 200 companies in China that specialises in producing steel structures and high-grade building materials, signed a contract to hire 108 ha of land.

In 2017, a good start for attracting foreign direct investment (FDI) capital into KBC’s industrial parks is the advent of US$100 million high-tech project of Hanwha Techwin Securities on 6 ha of land in Que Vo Industrial Park, Bac Ninh province. Quang Chau Industrial Park in Bac Giang province also welcomed a US$200 million project from Lens Company of China, which produces electronic and watch components.

What are barriers to harmonious synergy of investment projects and deeper engagement in value chains of FDI firms?
Investment and tax reform policies in recent years have caught the interest of investors. However, there are still certain barriers to harmonious synergy of FDI firms. First of all, public infrastructure in Vietnam is not synchronous and incomplete. At present, many roads have failed to meet the pace of industrial development, resulting in obstacles to circulation and transportation of commodities of enterprises. Secondly, the shortage of high quality workers in some localities has caused serious difficulty when they need to recruit a big well-trained labour force. The third is the legal barrier. For example, the Vietnamese land law disallows foreign investors to use leased land in industrial parks as collateral to arrange capital. This is a considerable limitation to small and medium enterprises (SMEs). As for deeper integration into value chains of FDI firms, the lack of supporting enterprises is the biggest barrier now.

Although the Party and State guidelines are clear and the Government has very strong policies to stimulate foreign investment, as foreign investment is very important to GDP growth and economic development, some localities and ministries/agencies still shrug off this reality as they believe that foreign investment is more pain than gain and they thus seek every excuse to deter foreign investment in the event that our legal system is not complete. Besides, corruption is a great hindrance to foreign investment flows.

Could you briefly introduce KBC’s competence and vision for cooperation in the future?
KBC still has great potential with industrial park infrastructure as it has 4,500 ha of unrented land in 11 industrial parks nationwide. With 15 years’ experience in infrastructure development and investment attraction, KBC is fully capable of developing its current projects. In the coming time, KBC will continue to push forward its mission of strongly attracting investment into industrial parks. Currently, KBC is approaching and discussing with big investors who plan to invest in high-tech, environment friendly projects to locate their projects into KBC's industrial parks. With its capacity and prestige in the past 17 years, KBC is confident that businesses and investors will always trust and cooperate with KBC to promote Vietnam’s economic development and contribute more to the society and people of Vietnam.








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