28 Jul Many large corporations continue pouring investment into Vietnam

Many large corporations continue investing in Vietnam, pushing the flow of foreign direct investment (FDI) into Vietnam to increase more than the same period.

Samsung-VietnamAfter Samsung, more and more Korean businesses have been finding their ways to Vietnam
to open new production facilities. Photo: By Duc Thanh

Details have not been disclosed, but more likely, LG Innotek, a subsidiary of LG Group, will invest in a project dedicated in camera manufacturing in the Economic Park of Dinh Vu – Cat Hai (Hai Phong). The project is expected to have 200 million dollars and much likely to be granted with investment certificate in the near future.

Actually, as long as the size of capital is considered, this is not a big – sized FDI project, it is even less than the project that Seoul Semiconductor Co. (Korea) has been awarded the investment certificate by Ha nam province lately. Seoul Semiconductor, as planned, will invest up to 300 million usd to build a factory specializing in the production of semiconductors and LEDs in Dong Van Expanded I Industrial Park.

However, this is the third project which LG Group has invested in Vietnam, after consumer’s electronic equipment Complex Project of 1 billion usd and LG Display Project of 1.5 billion USD which were granted with investment certificate last month. All these 3 projects are being implemented in Hai Phong, this accordingly proves the previous statement of LG Group that it is actually moving the production to Vietnam.

As such, after Samsung, another Korean giant has established a global production base in Vietnam with its key products. Not only large corporations, but more and more small and medium-sized Korean enterprises have also been finding ways to Vietnam to open a new production facility.

Beside Korean, Japanese businesses are also pouring capital into Vietnam. According to The Nikkei newspaper, the biggest manufacturer of air conditioner in Japan, Daikin Industries is planning to build a new production facility in Vietnam. The value of this investment is estimated at about 93.6 million usd. The plant is expected to start by 2018 with a production capacity of half a million air conditioners per year. If the favorable economic situation is witnessed, by 2020, Daikin – a very familiar brand in Vietnam market – will double it production capacity.

The positive information shows that FDI will continue to flow into Vietnam, despite the global capital – according to UNCTAD – does not have much improvement. Announcing the macroeconomic report at second quarter of 2016 yesterday (26 July), Mr. Nguyen Dinh Cung, Director the Institute for Economic Management Central (CIEM), considered FDI attraction as a bright spot in the economy in the first half of 2016.

The situation is even more promising when the latest figures from the Department of Foreign Investment shows that for the first 7 months, an estimated amount of 12.94 billion usd has been invested into Vietnam, a significant increase over the same period. In particular, the newly registered capital was nearly 8.7 billion usd, while the additional capital was 4.25 billion usd. Regarding FDI disbursements, the number is also very positive: 8.55 billion usd, up 15.5% over the same period last year.

Not only appraising the contribution of FDI in the first seven months of the year with exports turnover of over 68.9 billion usd, CIEM report also stressed that FDI has played its role significantly in and increasingly become important for the whole Vietnam economy, stimulating the competitiveness of enterprises in the same industry, creating jobs for workers, improving the domestic technological and management level through “spillover effect”. Besides, FDI involves several satellite investors to support particular industries, increase opportunities to participate in global value chains and access to international markets of Vietnam enterprises.

However, in a straightforward way, CIEM experts also pointed out that over past years the spillover effects of FDI has not been widening. Domestic enterprises have hardly associated with FDI. Thus, although there are many “giants” of FDI in Vietnam, in order to maximize the benefits of the capital flows and promote economic growth, it is necessary to strengthen the participation of Vietnamese enterprises in the supply chain in the region.

“This is the matter of supply and demand when they do not come to meet each other. Domestic enterprises desire to have output contract with FDI enterprises to securely invest in production technology, while FDI has already possessed its own supply networks and often expects domestic enterprises to actively offer and prove the supply capacity. Meanwhile, the intermediary role of the authorities – to introduce and connect domestic suppliers to FDI – is still weak,” Mr. Cung said and proposed to strengthen the intermediary role of state agencies to promote linkages between domestic enterprises and FDIs.

Along with that, regarding the incident of Formosa, CIEM also recommended to take measures to minimize the environmental impact of FDI.

Source: VIR

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