According to statistics, bilateral trade between Vietnam and the United States has increased significantly over the past 10 years: from US$1.5 billion in 2001, when the Bilateral Trade Agreement (BTA) came into effect in 2001 December to US$9.7 billion in 2006 when Vietnam joined the WTO and started permanent normal trade relationship with the U S and over US$22 billion in 2011. However, according to American Chamber of Commerce in Vietnam (AmCham), American investors are facing stagnation in the process of transferring from US related FDI by “partner factories”, etc
According to AmCham, in addition to strong growth in commerce, an increase about 17 percent in 2001 against the previous year shows that foreign investors, especially US companies evaluate opportunities in Vietnam positively. The current FDI investors increased their investment capital in Vietnam to US$3.1 billion in 2011, up 1.7 times over 2010. This indicates their satisfaction of Vietnam’s investment environment.
AmCham said that some leading multinational corporations focusing on fast moving consumer goods have invested US$200 – 500 million more from each company into Vietnam – the fastest growing market in the world.
Moreover, American FDI in modern industry creating high value surplus also increased, Intel takes the lead in investing US$1billion in assembly and testing plant at the Sai Gon Hi-Tech Park 1 and some other small investment. Currently, AmCham has established “Production Committee” with about 20 member companies from “modern manufacturing”-related areas. These companies have been very successful and even more: there is currently one company entering Vietnam 5 years ago having about 1000 workers and exports value about US$50 million/year, this company is seeking new place to expand their production because they expect their business situation to increase 3 times in 3 -5 years. Besides, AmCham member company – Jabil recently celebrated the groundbreaking for factory construction worth US$70 million at the Sai Gon Hi-Tech Park after 5 years successfully operating in a leased factory.
However, according to AmCham, US investors seem to face stagnation in the process of transferring from US related FDI by “partner factories” mainly from South Korea and Taiwan, etc. into operation in Vietnam before and after the Bilateral Trade Agreement Vietnam-US came into effect in December 2011 to produce low-value surplus consumer goods, to “the third wave” of American FDI companies in “modern manufacturing” factories specialized in high-value surplus goods for exports to the US and international markets.
According to the Foreign Investment Agency, in 2011, total capital of newly registered projects and increased-capital projects was US$14.7 billion, decreased 26 percent against 2010. One positive note is that total capital of increased-capital projects reached US$3.1 billion, up 1.65 times over the same period of 2011 (US$1.89 billion), indicating that foreign investors highly appreciate Vietnam’s investment environment, however, newly registered FDI projects decreased about 35 percent against the same period of 2010.
In February, 2012, FDI Confidence Index released by A.T. Kearney Global Management Consultants based on annual survey among global companies earning over US$2000 billion/year showed that Vietnam is the only Asian country slipped down, from 12th in 2010 to 14th in 2011. Meanwhile, Indonesia rose from 20th in 2010 to 9th in 2011 and had a record foreign capital of US$19.3 billion, double last year. Besides, Malaysia also had higher rank from 21st to 10th. Vietnam has some strong competitors for FDI in ASEAN.
According to the assessment, this risk cannot only bring failure to Vietnam in the process to develop in terms of average-income country, “modern manufacturing” and service, but also shows that Vietnam does not have competitiveness ability even in the role of “partner factories” to produce low value surplus goods compared to emerging markets and basic goods. This can lead to a loss of current FDI and millions of jobs in Vietnam.
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