4:24:47 PM | 1/11/2016
Hoa Binh now has 11 foreign-invested companies with a combined investment capital of over US$400 million, mainly situated in Luong Son Industrial Park. Contributions of foreign direct investment (FDI) companies to the socioeconomic picture are very clear. A typical example is Nissin Manufacturing Vietnam Co., Ltd, which fetches nearly VND300 billion of revenue and pays approximately VND30 billion to the State Budget a year. Besides, the company has introduced many Japanese companies to invest in Hoa Binh province. On the occasion of 130th founding anniversary of Hoa Binh and the opening of Hoa Binh Investment Promotion Conference 2016, Vietnam Business Forum has an interview with Mr Ichiro Oda, General Director of Nissin Manufacturing Vietnam Co., Ltd, on its bridging role in investment attraction. Ngo San reports.
Could you please tell us why Nissin chose Hoa Binh province to locate its factory, rather than another locality?
Nissin is a vendor for Honda Motor Company and it thus needs to place its production facilities close to Honda. Among many possible options, Hoa Binh province presented a lot of advantages.
Neighbouring the Vietnamese capital of Hanoi, Hoa Binh province has a relatively complete transport infrastructure and has a stable geological structure. As the Nissin factory has pressing machines of 600 tonnes, the company would have had to spend a lot on foundation work if it had chosen a locality with weak ground. As you may know, devastating flooding in 2011 damaged many production plants in Thailand. For that reason, selecting investment locations in localities with strong foundation is always a priority to the company.
Secondly, Hoa Binh has a national hydropower plant and the electricity supply is much more guaranteed than in other localities.
Thirdly, Nissin is not a big investor. If it placed its factories near bigger investors, it would face stronger payroll pressures in a more competitive labour market. Besides, Luong Son Industrial Park is near to Hanoi and major educational centres which will help the company recruit high-quality labourers.
The very good investment preference and support policy is the fourth reason for the company to come to Hoa Binh.
Hoa Binh province always regards Nissin as an important bridge to lead more investors to the province. What should the province do to draw more businesses and investors?
Nissin, which invested up to US$75 million to build a factory on 30,000 square metres, expected to attain revenue of VND276 billion and pay over VND28 billion of taxes to the State Budget in 2016. The company now employs 219 workers, who are paid VND6.4 million a month on average. Nissin Manufacturing Vietnam Co., Ltd is a bright example of effective FDI attraction policy of Hoa Binh province. Therefore, the province considers Nissin a bridge to fill the gap between Japanese investors and Hoa Binh province.
In my opinion, Hoa Binh needs to do the following to attract investors:
Hoa Binh has a major hydroelectric plant but its outdated electricity infrastructure leads to unstable power quality. Therefore, the province needs to ask the Electricity of Vietnam Group (EVN) to support the upgrading of electricity infrastructure. The repair and maintenance of power grid must be notified to local enterprises. When they meet enterprises, provincial leaders should frankly share this issue with enterprises.
Then, the province needs to have a clear land tax increase roadmap. According to our surveys, land rentals in Thang Long 1 and Thang Long 2 industrial parks are still relatively high, while they are provided modern infrastructure such as stable power supply, banking and postal services and worker housing. These reduce the appeal of the province to a certain extent.
Hoa Binh also needs to further improve transport infrastructure connected to Hanoi and other provinces to transport goods and reduce costs for enterprises. The province also should continue cooperating with the University of Forestry and other vocational schools to train workers according to employment needs of enterprises.
Besides hard infrastructure like electricity and traffic routes, Hoa Binh essentially speeds up investment in soft infrastructure such as industrial development services like banking, finance, telecommunications, insurance and worker housing.
For its part, Nissin has actively called its friends and partners in Japan to Hoa Binh. However, if the province fails to address its weaknesses, it will be very hard for it to attract more Japanese investment capital.
On the occasion of the 130th founding anniversary of the province and the Hoa Binh Investment Promotion Conference 2016, we hope that it will soon become an important economic centre of Northwest provinces and attract more businesses and investors to contribute to the process of local industrialisation and modernisation.
On behalf of Nissin Manufacturing Vietnam Co., Ltd, we put forth some ideas for Hoa Binh to be a better destination for investors.