Foreign Investors in Dong Nai Province: Success and Solidity

Nearly US$10 billion FDI capital in more than 15 years is a considerable sum to speed up the industrialisation and modernisation of Dong Nai. FDI companies generate 37 per cent of added value, 95 per cent of export earnings and 62 per cent of industrial production in Dong Nai. More than US$210 million has been injected into industrial zone infrastructure. The operation of many projects increased budget income for the State, increased export earnings in the province and created many jobs. Investors are increasingly pleased with the investment environment in Dong Nai. Furthermore, these projects also affect the economic and social life in Dong Nai, and facilitate rapid industrialisation and modernisation of the province.

 

A large majority of foreign projects in Dong Nai are in the industrial sector. So far, 448 out of 590 operational FDI projects in Dong Nai have invested in industrial production. The average industrial production value rises 25 per cent annually. In 2006, they generated VND35,675 billion (US$2.23 billion). In the first six months of 2007, the figure was estimated at VND20,769.6 billion (US$1.3 billion), representing an increase of 25.2 per cent against the same period of 2006. Foreign investors are engaged in many production fields such as drinks, apparel, textile, leather tanning, dyeing, chemicals and chemical products, office equipment, wood furniture, transportation, electrical distribution and others. Many sectors have large production value and stable markets, ensuring a high growth rate. Particularly, the food and drink sector generated VND4,903 billion (US306.44 million), up 26.4 per cent; garment and textile generated VND3,134 billion (US$195.86 million), up 31.1 per cent; leather tanning generated VND716 billion (US$44.75 million), up 33.2 per cent; suitcase, bag, saddle and footwear production generated VND3,521 billion (US$220.06 million), up 17.5 per cent; chemical and chemical products generated VND1,687 billion (US$100 million), up 26 per cent; and rubber and plastic production generated VND810 billion (US$50.62 million), up nearly 25 per cent.

 

Total export revenue in the province in the first six months of 2007 was estimated to exceed US$2.41 billion, fulfilling 44 per cent of this year’s target and up 30 per cent from the same period of 2006. Foreign investors contributed nearly US$2.26 billion, equalling nearly 45 per cent of the yearly target and increasing 30.2 per cent on-year. Export activities help boost local production and raise the position and competitiveness of products on the world market. Import spending of foreign-invested companies remained high, at US$2.87 billion, up 32 per cent on-year. This showed that investment for technologies and production lines, and material imports for production are very active.

 

Most successful projects in Dong Nai were studied carefully before beginning their projects. With strong capital capacity, technology and managerial level, and an investment environment and market awareness, these companies quickly carried out their projects to build factories, recruit employees, establish distribution systems and exploit export markets; thus, they reaped success in a short time. Apart from subjective reasons of investors, the quicker implementation of projects in Dong Nai than in other localities is also attributed to the favourable conditions given by local authorities during the time investors carried out the procedures, as well as during the time they do business. Dong Nai is resolute in implementing administrative reform, resolving difficulties for investors and giving more investment incentives to investors in remote and mountainous industrial zones.

 

Many foreign investors have secured strong footholds in the Vietnamese and foreign markets. After 10 years in Dong Nai, Sanyo DI Vietnam has become a major producer of washing machines, refrigerators and air-conditioners in Vietnam and its products have also been exported to many other countries in the world. Recently, the company [SLG1] officially opened the US$30-million digital camera production plant in Bien Hoa Industrial Park II.

 

Aside from Vedan and Sanyo, other companies also plan to increase their investment capital, including Fujitsu, Mabuchi, Taekwang Vina, Tainan, Pouchen, Fengtay, CP Group, ChangShin, Cargill, Ajinomoto, TCL, VMEP, Happy Cook and Nestlé. Suzuki has invested an additional US$20 million to build its second factory in Loteco Bien Hoa Industrial Zone, to increase its automobile and motorbike output in Vietnam. Newcomer Formosa Group has become a giant polyester fibre producer with monthly export earnings of US$25-26 million. Currently, the company is striving to build BOPP plant to stabilise its production. The US-based Nike also has 7 partnership plants in Vietnam with nearly 70,000 employees and these plants are moving on the expansion. PC parts maker Fujitsu VN manufactured 31 million assembled printer boards and 42 million printer boards valued at US$510 million in 2006, up 15 per cent on year. The company has trained more than 3,500 employees to a high standard. Ajinomoto Vietnam, set up in 1991,is a wholly foreign-owned company under Japan’s Ajinomoto Inc, Tokyo. Apart from its traditional product of AJI-NO-MOTO trademarked monosodium glutamate, Vietnamese consumers have now known its Aji-ngon spices, premium AJI-PLUS seasoning power, LISA rice vinegar and LISA mayonnaise. The company has applied the ISO9001-2000 quality management system and HACCP food safety and hygiene management system to meet the demanding requirements from customers. Ajinomoto is proud to be the first foreign-invested company in the food processing industry in Vietnam to obtain the ISO14001 certificate on environmental management system. In the domestic market, Ajinomoto Vietnam is very familiar to Vietnamese consumers, thanks to its sales network in all 64 provinces and cities in the country, from urban to rural areas, even far-flung localities. Vedan Vietnam Ltd Co. has turned poor cassava, cashew and eucalyptus growing areas in Phuoc Thai Commune of Long Thanh District into Go Dau - Phuoc Thai Industrial Park, now full of factories. Vedan is now one of three largest foreign investors in Dong Nai in terms of investment capital. The company has raised its initial US$183 million to US$452 million, a 246 per cent rise. Not only producing monosodium glutamate (MSG), acid/caustic soda, lysine, starch/modified starch (CMS), glutamic acid (PGA), starches for food, textile and pharmaceutical product in Phuoc Thai, Vedan also has four satellite factories in the south-western, central highland and northern central regions. Vedan’s products are for the Vietnamese market and also for export, which accounts for 30-40 per cent of total revenue. In 2006, the company’s total revenue reached US$244 million, up 11 per cent against 2005, of which US$93 million came from export.

 

The success of foreign investors in Dong Nai Province has been proven. Many companies have received certificates of merit from Dong Nai People’s Committee and the Ministry of Industry, and medals from the State President. Several companies won the Saigon Times (SGT) Top 40 Awards for foreign investors. In 2007, 10 FDI companies in Dong Nai won awards, including Tung Kwang, Vedan Vietnam, Fujitsu Vietnam, Tainan Vietnam Spinning, Cargill Vietnam, NecTokin Electronic Vietnam, Nestle Vietnam, TPC Vina, YKK Vietnam, and Bourbon Dong Nai. Especially Tainan Vietnam Spinning Company (in Bien Hoa Industrial Park II) stood out by winning awards for four consecutive years. Nestle Vietnam and Fujitsu Vietnam (in Bien Hoa Industrial Park II) won prizes for practical contributions to environmental protection. Several foreign-invested companies in Dong Nai also won the Golden Dragon Award 2006, such as Vedan Vietnam, Tainan Spinning, Taya Vietnam Electric Cables and Wires and Fujitsu Vietnam.

 

Apart from their contributions to economic growth and budget payment, foreign-led projects have created jobs for local labourers and helped increased their incomes. The skill of the workforce has significantly improved in the industrial working environment, in interaction with advanced technologies and equipment. The building of industrial zones and factories both created jobs for local construction workers and consumed large volumes of steel, fuel, cement, wood, bricks, stone and sand. Among the important contributions of foreign investors is the development of material zones, the creation of employment and the consumption of locally produced materials. Many companies use a large volume of farming products from Vietnamese farmers, which in turn helps farmers improve living standards. Besides, they also cooperate with vocational centres, research institutes and schools to provide high-yield crops, cultivation practices, techniques, and technological applications for farmers.

 

Especially in recent years, foreign investors in Dong Nai Province showed strong concern for the community and environment. Many factories have applied new environmental standards and treated waste. Not only contributing to Dong Nai’s economic growth, foreign investors also boost development and support related industries as well as commercial service activities. Many enterprises also contribute to social activities in the province and the country. Many even organise their own social activities. In the past year, Ajinomoto Vietnam implemented many social activities such as the formation of “Ajinomoto - Bringing you to school” scholarship programme for poor talented students in Dong Nai, Ho Chi Minh City, and Hanoi City. It also cooperated with Ho Chi Minh City-based Nguoi Lao Dong Newspaper (Labourer) to annually implement projects to build charity houses and provide scholarships for students in remote and poor localities nationwide. In 2007, the company donates some VND800 million (US$50,000) for charity activities.

 

Vedan Vietnam also takes part in social activities such as poverty reduction, disaster relief and scholarships, and organises the annual “Sharing happiness, adding smiles” campaign, raising nearly VND150 billion for scholarship funds, charity house buildings and other activities.