The electronics industry has topped the country’s exports by value since 2013, with annual value in excess of US$30 billion. In the coming time, the Vietnamese electronics industry is also a destination for big foreign investors.
Magnet to FDI flows
According to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, the irresistible appeal of the Vietnamese electronics industry comes from world-acclaimed names like Samsung, Foxconn, LG, Panasonic and Intel among others with mammoth production projects in the country.
Remarkably, many localities have sought out ways to lure foreign investors. Specifically, immediately after the Samsung production facility in Thai Nguyen province came into operation, supporting investors also arrived in the province. A huge sum of money has been invested by electronic component manufacturers in Thai Nguyen province and Hai Phong City. And, of course, most of component production factories are invested by foreign investors.
Besides, one of golden addresses of FDI flows in the northern region is Vinh Phuc province. According to experts, Vinh Phuc is successful in both quality and quantity of foreign-invested electronics investment. In October alone, the province licensed two FDI projects into industrial parks and one project outside industrial park. Two projects licensed into industrial parks registered to manufacture electronics parts with a combined investment value of US$75.1 million. Amo Vina recently decided to add US$3 million to its investment base in October, raising the registered value to US$78.1 million. Sumitomo Corporation registered to invest US$70.1 million to build an industrial park for electronics production projects. In the first 10 months f 2015, Vinh Phuc province attracted 17 FDI projects with a total registered capital of US$349 million. Particularly, electronic industry accounted for a substantial proportion of the registered value. Smart Co. Ltd and Sekonix Vina invested in electronics and information technology projects.
Vietnam is now the third biggest electronics exporter in the ASEAN region and the 12th biggest exporter in the world in 2014, according to experts. In 2013, Vietnam’s electronic output was behind only Thailand, Singapore and Malaysia. Another reason for the arrival of FDI flows into Vietnam is foreign investors see tariff opportunities after Vietnam negotiates and concludes important multilateral and bilateral trade agreements like Trans-Pacific Partnership (TPP) and the ASEAN Economic Community (AEC).
Barriers to be removed
In addition to good points, the Foreign Investment Agency also pointed out limitations and difficulties in FDI attraction into Vietnam. For example, we are just outsourcing electronics products, a difficulty in meeting rules of origin in AEC and TPP. Besides, Vietnamese electronics companies do not contribute much to electronics supply chains. This reality was admitted by Samsung Vietnam when it said that less than 10 percent of its 80 vendors are Vietnamese. Notably, they are mainly engaged in printing and packaging which generates the least added value hand has little impact on the economy. Another obstacle is foreign investors can completely change their investment strategies and relocate their projects to other nations when investment incentives end.
Therefore, in the coming time, to improve investment flow quality and seek a comprehensive solution to attracting FDI investors, the Foreign Investment Agency suggested introducing scientific and technological policies to encourage technology transfer, human resources training and research and development (R&D). Vietnam can sign technological cooperation contracts with electronic companies in developed countries (Japan, the United States and South Korea), cooperate with research institutions and businesses to pick up products and areas of priority. Intellectual property laws must provide protection periods long enough for domestic and foreign investors to feel assured when they transfer technologies and develop products.
In addition, Vietnam needs to have a master plan to develop industrial parks in general and electronic industrial parks in particular in order to attract investment, conduct R&D on electronics in cooperation with big electronics firms present in Vietnam like Samsung, Intel, Sony and Canon, select strategic products for research, and train human resources. To keep investment projects, Vietnam must make foreign investors see Vietnam as their second homes by providing them with a comfortable life, considerate and reliable services, and a friendly environment.
Anh Phuong
Vietnamese
