Grasping Opportunities

In the first six months this year, Vietnam licensed 484 foreign direct investment (FDI) projects with US$3.93 billion total registered investment capital. If the US$870 million supplemental capital for 199 projects is counted, the six-month FDI capital figure is US$4.8 billion, nearly half of US$10.05 billion FDI capital in 2006.

Although the FDI figure has not met the expectations of optimistic analysts in early 2007, the goal of drawing US$12 billion FDI capital is still within reach if pledges by foreign investors are carried out. Speaking at the “Vietnam Day” seminar on July 5 in Toulouse City, Mr Marc Villard, President of the French Chamber of Commerce and Industry in Vietnam said, with its population of more than 84 million, stable economic growth and swift international economic integration, Vietnam has become an attractive destination for foreign investors. Moreover, with its geographical location and importance in the Association of Southeast Asian Nations (ASEAN), Vietnam will be the gateway for foreign investors to penetrate the region’s market.

 

The “Vietnam Day” seminar was organised by the Chamber of Commerce and Industry of the Midi Pyrénées region, the Chamber of Commerce and Industry of Toulouse City and the France Chamber of Commerce and Industry in Vietnam, to help businesses in the Midi Pyrénées region better understand Vietnam’s investment attraction policies as well as the potential of Vietnam-France economic and commercial cooperation. The Chamber of Commerce and Industry of the Midi Pyrénées region introduced participants to the ASEAN Business Forum to be held in Hanoi November 22-23, and called all businesses in the region to consider this opportunity to penetrate the Southeast Asian market.

 

In the European Union, the United Kingdom (UK) is the largest investor in Vietnam. UK Ambassador to Vietnam Robert Gordon said Vietnam is becoming a powerhouse in Southeast Asia and will possibly play a more active role in trade negotiations between ASEAN and other regions. “We hope that Vietnam will play an increasing role in many issues in the future like a Free Trade Agreement between the European Union and ASEAN,” Mr Gordon confirmed.

 

According to Mr Gordon, Vietnam is highly capable of narrowing the gap with the founders of ASEAN. In fact, Vietnam has become an attractive destination for foreign investors, especially after joining the World Trade Organisation (WTO). Mr Gordon forecast FDI capital into Vietnam will reach US$20 billion in 2007, twice as much as 2006.

 

Like European countries, Asian nations are seeing Vietnam as a high potential investment destination. For the past two years, Asian countries have vied to become the top investor in Vietnam. Before 2006, Singapore and Taiwan were the two largest investors in Vietnam, but since 2006 South Korea emerged as the largest foreign investor in the country. However, Japan is the largest investor based on disbursed investment capital. Japan has disbursed nearly US$5 billion out of nearly US$8 billion registered capital.

 

Nobutoshi Akao, Director of the Japan-ASEAN Centre, stressed that with its favourable location, stable society, young and industrious workforce and low labour cost, Vietnam is now an attractive address for Japanese investors. Speaking at the “Investment in Central Vietnam” seminar in Tokyo July 9, Mr Nobutoshi Akao acknowledged the effort of the Vietnamese Government in improving its investment and business environment, especially since the new Investment Law took effect in 2006.

 

Apart from advantages in stable resources and environment, foreign investors also see Vietnam as an alternative destination to China, which has already been developing for years. Many Hong Kong investors are seeking investment opportunities in Vietnam after the Southeast Asian nation joined the WTO in February 2007, because taxes and production costs in China keep growing.

 

A delegation of 17 Hong Kong businesses led by Woo Kwong-Ching, Chairman of Hong Kong Trade Development Council (TDC), arrived in Vietnam in late June to seek business opportunities. The TDC delegation, consisting of garment, textile, jewellery, finance, logistics and household electrical appliance businesses, arrived in Hanoi and Ho Chi Minh City.

 

TDC Chairman Woo Kwong-Ching said Vietnam’s competitive labour force and its competitiveness as a manufacturing base, particularly for garments and electronics, have drawn the attention of Hong Kong businessmen. The Hong Kong bourse-listed automobile equipment manufacturer Zhongda International Holdings intends to set up its first overseas plant producing truck chassis and vehicles for special purposes.

 

Mr Eddie Yeung, Director of Chun Wo Holdings, a Hong Kong bourse-listed construction giant, affirmed that demand for real estate development in Vietnam is huge. He said Vietnam holds various advantages such as an abundant labour force with competitive pay, an ideal condition for investors to grasp the first market shares on this immense market. His company is continuing the development of a multipurpose real estate project in Ho Chi Minh City.

 

Also in a bid to find new investment locations, India has changed its investment approach toward Vietnam. During the Indian visit by Vietnamese Prime Minister Nguyen Tan Dung, the two countries announced a strategic partnership. Indian businesspeople expressed greater interest in the Vietnamese market, aiming to bring India to the top-ten list of foreign investors in Vietnam in a short time.

 

As European and Asian investors are eager to enter Vietnam, investors from the United States don’t want to be latecomers. During the US visit by Vietnamese President Nguyen Minh Triet in late June, businesses of the two countries signed economic contracts valued up to US$11 billion. According to a source, many giant US firms are mulling investment in mammoth projects in Vietnam.

 

Vietnam’s prospects for foreign investment capital attraction have never been as bright as now. However, to grasp this chance, Vietnam needs to continually improve performance. UK Ambassador to Vietnam Robert Gordon noted Vietnam needs to raise the quality of economic administration, speed up consumption and introduce concrete commitments to foreign investors. Besides, Vietnam needs to restructure State-owned enterprises to focus on production and export of highly competitive products.