Saigon Investment Corp. Taking Initiative in All Aspects

Vietnam Business Forum interviewed Mr. Dang Thanh Tam, chairman cum general director of Sai Gon Investment Corporation about foreign investment and the role of Vietnam’s enterprises in the post-WTO period.

 

Actually, I met the chairman of Foxconn Corporation by chance and later reached the cooperation agreement with his company. When I attended APEC 2006 summit, I had a talk with a high-ranking official of the Taiwanese delegation, and he introduced me to one of his cousins who arrived in Vietnam for a market survey in December 2006. His cousin, the chairman of Foxconn, decided to pour capital into Vietnam after his survey.

 

The forum was held within the framework of Vietnam Prime Minister Pham Gia Khiem’s tour. Mr Pham Gia Khiem and his working group met and talked with Japanese businessmen and politicians, including the investment workshop “Towards Vietnam” held by Japan’s Trade Promotion Organisation, in coordination with Vietnam Chamber of Commerce and Industry (VCCI) and the Vietnam-Japan Business Forum held by the two embassies.

 

Vietnam-Japan Business Forum attracted the attention and participation of more than 500 Japanese enterprises and many senior officials of well-known corporations such as Mr Oka, Chairman of Vietnam Department of Japanese Enterprise Union (KEIDANREN) or chairman of Sumitomo Corporation. During meetings and conversations, most of Japan’s politicians and businessmen unanimously agreed to push Vietnam- Japan relations. Both Vietnam and Japan expressed strong determination to develop comprehensive and stable diplomatic relations, complying with the desires of the two nations. Especially, Japan affirmed continued support for Vietnam’s economic development and international integration, by contributing to Vietnam’s industrialisation and modernisation.

Japan offered official development assistance (ODA loans) for Vietnam in coming years, emphasizing infrastructure improvement. The two parties agreed to increase bilateral trade to US$15 billion by 2010, encourage Japanese business to enter Vietnam and enhance bilateral cooperation in new fields such as technology, energy, logistics, education and culture. Japan’s leaders, senators (policy makers), functioning ministry (the level approving investment projects) and large economic corporations (the level carrying out implementation) strongly agreed to support three big investment projects signed by the governments of two nations. They affirmed support programmes for Vietnam in implementing these three key socio-economic projects. Japan understands Vietnam’s strong will and preparation for the three projects. At the same time, Japan confirmed it will push preliminary research and inspection, and propose construction and finance plans to carry out the above three projects in the most effective and practical ways.

 

In my opinion, Vietnam’s enterprises should take many matters into careful consideration for their business. In general, they should pay attention to human resources. Businesses with skilled and qualified human resource will find success. High-profile corporations have already built their long term development plans and formed an entrepreneurial culture. While more than a few Vietnam enterprises are making two year development and production plans, most of them have only one year plans. Now in the WTO, the economy is gradually getting a stable legal framework. In the past, our business environment was small like a river where we could see clearly the other bank, but now our business environment is so large that we can easily lose our way, hit the rocks and sink. A good development plan requires a knowledgeable designer and experienced staff to carry it out. This brings us back to the issue of human resources.

 

In fact, Vietnamese enterprises still lack effective ways to bring into full play human resources. Skilful human resources are often concentrated in limited areas such as big cities.

 

There are several reasons for the brain drain from Vietnam’s enterprises:

First, Vietnam’s enterprises are weak at collecting market information, although Vietnam’s Government has created favourable conditions for them to penetrate external markets in recent years through foreign tours. These tours have received participation from both the public and private sectors. The government provides a valuable chance for Vietnam’s enterprises to represent themselves and get economic and political information.

The second reason relates to improving management and production in order to increase output and lower prices. This is another weakness of Vietnam’s businesses. They are still unable to predict input cost; they therefore can not adjust production cost to lower prices. Besides, their capacity to utilise technology and impose financial self-control is rather weak, especially among State-owned enterprises. Despite government resolutions, state-owned enterprises are adjusting slowly and passively.

 

The third reason is marketing and consumption capacity. The two factors are inter-related. We should mention another factor - internal unity within Vietnam. Among Vietnam’s enterprises, once a disagreement occurs, those related will appeal against or denounce the opposition. This destroys the collective strength of enterprises.

 

As a result, competitiveness is very low, especially among stated-owned enterprises. Ineffective management mechanisms are another shortcoming compared with regional enterprises in China, Thailand and Singapore.

 

In conclusion, I think Vietnam’s enterprises should enhance their own competitiveness. It seems that both State and private enterprises have not yet considered this as a strategic policy, but instead as a request from the Government. They haven’t recognized their role within the WTO. In practice, I haven’t seen any big changes, though this could be a life-and- death question for enterprises.