Vietnam betting on strategic cooperation with Samsung

IDeputy Prime Minister Hoang Trung Hai requested the ministers under him to introduce the key national investment projects to Samsung and work out the South Korean investor’s possibility of getting involved in the development of the projects.

n a recent document sent to relevant ministries and branches,
Commenting about this, Dr. Nguyen Ngoc Anh, Chief Economist of DEPOCEN, a policy research institute, said the government of Vietnam has shown its special interest in cooperating with Samsung by laying a “suitable” carpet to welcome the special investor.
The government of Vietnam believes that Samsung’s investments in Vietnam can bring the special benefits for the economic development.
When the big investors like Samsung make an investment in Vietnam, they would not only bring capital, technologies, management and marketing skills to Vietnam, but also bring the opportunities to Vietnamese enterprises to join their global production chains.
This is of a very important significance nowadays, when “trade in tasks” gets more and more important in the international trade and investment.
Samsung’s investment in Vietnam is a part of the China plus one strategy being followed by the multinational groups which aims to disperse risks and optimize profits.
Samsung’s greatest advantages can be seen in four fields - electronics, shipbuilding, engineering and construction. Especially, it is one of the world’s leading electronics manufacturing groups.
While other economists keep doubtful about the benefits Samsung can bring to Vietnam in the strategic cooperation, Anh believes that Vietnam needs to “bet” on the cooperation with Samsung.
This is for the first time Vietnam receives the world’s gigantic technology groups, powerful and willing to pour huge sums of money into Vietnam, like Samsung, LG or Intel.
The presence of the big economic groups in Vietnam would help the country join the global production chains and develop strong industries of its own. At first, Vietnamese enterprises can only undertake the simple and labor intensive jobs in the production chains, but they later would be able to undertake the jobs which can create higher added values.
These projects, in the eyes of Anh, are far better than the oil refineries or the projects in the polluting industries.
“The opportunities are really great which should not be missed,” Anh commented. “Vietnam has some 10 years to grab the opportunities.”
He went on to say that if Vietnam still remains indecisive, it may see the opportunities go away. “Multinational groups, which fled China, can also run away from Vietnam. Besides Vietnam, they still have other choices including Myanmar, Bangladesh and other ASEAN countries.” Anh said.
Do Thien Anh Tuan, Lecturer of the Fulbright Economics Teaching Program, while agreeing that the cooperation with Samsung would bring great benefits, has warned that big challenges would arise for Vietnam.
Vietnam would have to offer special preferential policies to the big investor in terms of mechanisms, land, capital and credit sources, thus weakening the resources for other preferential policies.

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DECLINE OF STATE OWNED ENTERPRISES

The number of state-owned enterprises (SOEs) operating in Vietnam has fallen by 50 percent since 2000, according to figures released by the General Statistics Office’s Industrial Statistics Department. The department reported a total of 3,135 SOEs in 2013, down from nearly 5,800 in 2000.

This decline is partly the result of measures implemented by the government of Vietnam to return SOEs to the country’s private sector in the hopes of garnering greater domestic and international investment into the country’s economy.

Equity shareholders now own half of the companies that fell off the list of state-owned enterprises over the last 13 years, with the remaining half now under private management.

The push to privatize SOEs has been met with positive results as nearly 80 percent of privatized firms reported earnings growth following their transition. An astounding 40 percent reported growth of over 10 percent as a result of their equitization.

During his year-end speech at the Vietnam Development Partnership Forum, Prime Minister Nguyen Tan Dung reaffirmed the country’s commitment to continue efforts aimed at the privatization of Vietnam’s large SOE sector. He emphasized the importance of private and international investment to the country’s continued economic development and outlined plans to equitize another 500 SOEs in 2014.

“What remains to be seen is how far they will go in embracing reforms and how soon they will level the playing field between SOEs and the private sector,” Kyle Spring of the Center for Strategic and International Studies said

With these concerns in mind, Prime Minister Dung released a statement for the New Year, emphasizing the National Assembly’s commitment to improved economic growth in 2014 through the reduction of obstacles to create favorable conditions for business operations.

“Our tasks are huge, while difficulties and challenges are great. However, this is a chance for us to speed up stronger reforms,” said PM Dung.

                                                                                                                        By Vietnam Briefing

MANUFACTURERS TRANSFER MARKET FROM CHINA TO VIETNAM

Since China's reform and opening-up, foreign capitals and industries have been transferred to China. China's GDP ranks the second in the world. However, the cost of land, energy, labor force, etc. is increasing fast in China. Many manufacturing enterprises in China is under high cost pressure.

ASEAN countries have been the next investment target for Chinese and foreign enterprises. Among those, Vietnam is abundant in resources. The coastline is long with many ports, which is beneficial for lowering ocean shipping cost. Vietnam is the bridge connecting China, Southeast Asia and Asia-Pacific regions.


The political situation is stable in Vietnam, without warlords or terrifying attacks. Vietnam government eases the regulations on the foreign exchange rate. Meanwhile, there are little limitations for private and foreign capitals. The economic environment is fair without monopoly.

Vietnam government insists reform and opening up policies. Investors can develop industries in a good and stable policy environment.

In Vietnam, the labor cost with the same education level is much lower than that in China. Meanwhile, the prices of land, energy, some varieties of raw materials are also lower. The legal working time is longer than that in China.

Vietnam is in a process of fast industrialization and urbanization. There are many investment opportunities in construction materials, agricultural products, construction machinery, textiles, household appliances, IT and service industries.

Researchers of China Research and Intelligence investigated in the labor cost, land cost, investment policies, etc. in Vietnam and made comparative analysis with those in China to complete this report. This report is a general reference for China-based manufacture enterprises interested in investing in Vietnam.

                                                                                                           Albany, NY -- (SBWIRE) 

DIVERSIFYING OPPORTUNITES

Why don't our industrialists and business people plan to make their investment in Vietnam? 

 

Many lucrative and cost-effective areas are there to invest in Bangladesh. Investments can be made in marketing high value-added items and in setting up high-tech industries like electronics, telecommunication, automobiles, chemicals, dairy products, professional service providers in the field of engineering, construction and so on. In addition, investments can be bolstered in low-tech profitable industries like assembling and manufacturing air conditioners, refrigerators, television and water-coolers. Bangladesh spends huge volumes of foreign exchange for import of high-tech and low-tech items annually. Huge foreign exchange is used every year by importing dairy products from abroad, whereas this country is best suited for dairy industries.

Most of the developed and emerging economies have already diverted their investments to different segments nationally and internationally, and are getting the economic benefits of diversification.

Germany in Europe has a strong economic foundation because it has globally diversified investments. The Deutsche Bank Research report in July 2012 states: "The share of German passenger car exports going to other euro-area countries dropped from 48 per cent in 2000 to just fewer than 31 per cent in 2011; in H1 2012 it even fell below the 30 per cent mark. In parallel, the share of German car exports accounted for by the BRIC countries raised from just over 1 per cent in 2000 to more than 17 per cent in 2011, even though local production of German-brand vehicles in these countries was also on the rise during that period." Some emerging economies are also planning to divert investments. The GCC countries are in the plan to divert their investments keeping in mind that their oil resources are depleting and in later years would be exhausted. To secure the stability and the sustainability of income levels in the future, the GCC countries unanimously agreed to diversify themselves in various types of investment within borders and beyond. The East Asian emerging countries are diversifying their investments from traditional low-tech to high-tech areas and from Asia to Europe to North America. 

Very recently, Malaysia has entered into a contract for investments in Canada for establishing LNG projects. The politicians of some emerging countries, as we have noticed, have come up with some specific election campaign agenda for changing the economy from low-tech to high-tech, raising the country from the status of middle-income to high-income, and thus reducing unemployment and illiteracy rate.

SWEDISH BUSINESSES WANT TO INVEST IN VN

Swedish businesses expressed their interest in Viet Nam’s investment environment and attraction during a meeting with Deputy Prime Minister Hoang Trung Hai in Ha Noi on November 18.

Deputy PM Hoang Trung Hai receives Swedish business, Ha Noi, 18 November, 2013

They mentioned fields of interested investment and development support, including banking and financing services, recycling technology, transport and supporting industries.

Deputy PM Hai stressed the sound bilateral ties between Viet Nam and Sweden, saying that Viet Nam is growing stably, overcome challenges, continue international integration and want to draw further investment and cooperation from all other countries.

 He spoke highly of the Swedish Government’s policies to encourage their businesses to invest and trade in Viet Nam in areas which are Sweden’s strengths and Viet Nam’s demands for socio-economic development.

The Government of Viet Nam has taken many policies and measures to facilitate foreign businesses, including those from Sweden, to invest and trade stably in Viet Nam, considering foreign investors’ success as the country’s, said the Government official.

The two-way trade turnover between Viet Nam and Sweden has reached nearly US$1 billion and an impressive growth rate of 20% per year. The European country currently has 34 projects in Viet Nam and provides over US$3.4 billion of non-refundable official development assistance to Viet Nam.

FRENCH'S INVESTMENT TO IMPROVE IN VIETNAM

French investors trusts Viet Nam and sees important opportunities in this country in various sectors, confirmed President of French Chamber of Commerce and Industry (CCIFV) Pierre-Jean Malgouyres in an interview with our reporter on September 24.

When asked a bout the expectations of PM Nguyen Tan Dung’s official visit to France, the President hopes that that the visit will enable the two countries’ cooperation and will be an opportunity to sign contracts between French and Vietnamese companies.

France is the 2nd largest Foreign Direct Investment (FDI) providers in Viet Nam among European countries, he said, adding that the quality and stability of French investments in terms of services, industry, water, electricity, infrastructures and agriculture makes France one of the closest partners of Viet Nam.

Regarding to contribution of CCIFV in accelerating the two nations’ trade and investment, CCIFV has boosted business between our two countries in two ways.

First of all, CCIFV helps bringing new French businesses to Viet Nam through its business support department focused on market-study, matchmaking and identification of appropriate suppliers, retailers, potential partners, customers, etc. In addition, CCIFV organizes on a regular basis prospecting missions, a fundamental step for companies to decide to enter the Vietnamese market. Furthermore, CCIFV meets success in Viet Nam and to eases their development by providing business development support, domiciliation services, recruitment and training activities or various communication tools to increase their visibility.

But the association’s activity to strengthen our business relations is not a one-way strategy. CCIFV is also able to take Vietnamese companies to France so they can find new business opportunities and develop their activities and presence on the European Union market, one of Viet Nam’s primary trade partners, for example, organizing regular delegation to France during major trade shows like Pollutec 

Last but not least, CCIFV is strongly involved in its mission to federate French or France-oriented local companies and to animate the business community here in Viet Nam through a rich program of events happening all year long: sector-committee meetings, breakfast talk or luncheon with speakers from various backgrounds and sometime high-profile, networking, business forum, gala dinner and large-audience events such Balade en France. As the commitment of CCIFV in the preparation and events organized for the 40th anniversary of the two sides’ diplomatic relations shows, the business association is among the main players in Viet Nam working on bilateral economic and business ties, in close cooperation with French institutional partners, including the Economic Department of the French Embassy, Ubifrance and the French Consulate in HCMC.

In terms of the investment trend of French businesses in Viet Nam in the upcoming time, Mr. Pierre-Jean Malgouyres stressed that the flow of French investment grew significantly at the end of 2012 through new licenses or extension of projects. This shows that despite the global economic context, particularly difficult in Europe, French investors still trust Viet Nam and see important opportunities in this country in various sectors: information technologies, services, tourism, infrastructure, electricity and water, agriculture, etc.

He initiated that France has a lot to bring to Viet Nam in the area of high-technology, plane industry, and clean infrastructures in various sectors such as transportation, urbanism and construction or water treatment.

Speculating about the future behavior of investors the President is quite confident in the fact that the trend of French investment will improve or at least stabilize. The French Chamber of Commerce welcomes new entrepreneurs who wish to develop their business in Viet Nam and invest their savings.

However, he mentioned this fact that it highly dependents on the business environment and regulations in Viet Nam.

The CCIFV gathers the majority of French companies based in Viet Nam. In 2013 CCIFV is the home to more than 280 members and offers several services to them (mostly French companies locally implanted or willing to discover the Vietnamese market). Thanks to its services and activities, the CCIFV contributes to promoting Vietnamese companies in France and supporting those who desire to invest in Viet Nam.