Big Manufacturer Waves Enter Vietnam

Facing difficulties in manufacture and consumption, some big car manufacturers in Thailand and Indonesia are planning to find new market in ASEAN. Moreover, recently, LG Electronics- the world’s second largest television manufacturer also intends to move from Thailand to Vietnam.

According to Federal Thailand Industry –FTI’s figures, In 2014, 881,800 cars were sold in Thailand, decreasing 34% compared to 2013. That is the second year in two consecutive years the market is in recession. It was a strong effect to decrease the quantity of output produced in last year : 1,88 million cars (included quantity exported). In Indonesia, quantity sold also lightly decreased which caused reduction of the quantity produced from 1.4 million cars down to 1.3 million cars.

Except for the problem of production, Thailand investors are facing other difficulties, political depression has effected manufacture and trade,and high costs of labor have risen the price up. Besides, Thailand’s manufacturing capacity is full, if we want to increase it, we have to invest more. All difficulties above force cars manufacturers to seek for new producing places.

In ASEAN, there are two places which investors are considering to: Philippines and Vietnam. These are two populous countries have enormous potentiality. Hence, the investors still want to invest money in these two countries.

Many people think that this is a facile opportunity for Vietnamto intensively attract new investors, develop cars industry, accommodate domestic demand and export. In Vietnam,  monthly figures on consumption which enterprises declared indicated that the growth still has not had signs of slowing down.

According to the monthly report in Jan 2014, VAMA forecasted industry’s  consumption rate in 2014 would be about 120.000 cars and increase 9% compared to ones in 2013. However, the real number raised almost 158.000, increased 43%. The quantity sold in December achieved a new record when surpassing 20.000 cars and this is the 21th consecutive month when the industry’s  quantity sold higher in comparison with the same period previous year .

Vietnam’s  advantage is an enormously potential cars market.In forecast, after 2020 when nation’s income per capita overcomes  3000 USD, the demands of cars will break out. In Vietnam, there are two million of car types, rate of cars per capita is still low, in 2030 the quantity sold would overcome 1 million cars per year. In addition, the low costs of labor in Vietnam helps reducing the costs of manufacture.

 LG chooses Vietnam to be the producing place instead of Thailand:

LG Electronics – the world’s second largest televisions manufacturer is planning to move manufactory from Thailand to Vietnam in this year because of efficient producing system, low costs and good logistics services.

In October 2013, LG was authorized to invest 1.5 billion USD to Vietnam for constructing factories in order to produce and assemble electrical goods.

In a phone  interview with Reuters’ reporters, Mr. NiponWongsaengarunsri – LG’s marketing manager in Thailand revealed that LG want to construct a manufacturing “fortification” where produce new lines of TV like the main factories in Korea. And Vietnam is their best choice.

 “We consider Vietnam as an ideal destination to invest. Low costs of labor is an important factor. However, decisive elements are quality and good logistics services” said Mr. Nipon.

Besides, Mr. Nipon also revealed that LG produces about 600.000 TV products per year in Thailand, cost about 8 billion baht (243 million USD). Among those products, there are about 100.000 for export.

Will Vietnam gain benefit?

Following the integration process,  at the end of 2015,Asean Economic Community (AEC) will be established. It will give Vietnam opportunities to expand import and export market, attract investment and skillful labor force in ASEAN area.

Besides, Trans Pacific Partnership (TPP) is on negotiation stage with final rounds, will prospectively give opportunities to Vietnam’s economy. Free Trade Agreements (FTA)  is and will be concluded which contribute to attract investment and stimulate export.

In that circumstance, Vietnam government continually gives special treatments to foreign enterprises investing in high technological fields, many big Manufacturer chose Vietnam to be manufacturing “fortification” or expanding investment.  For instance, Samsung invested 11 billion USD for factories in Bac Ninh, Thai Nguyen, Ho Chi Minh city; Intel also declared production line of Haswell chip for desktop in Vietnam;  expecting to accommodate 80% global demand within the next six months.

2014 is the year for transferringbig enterprises from China to Vietnam. Not only Samsung, Intel, Nokia… but also many enterprises in textile, shoes, are pouring billion USD to manufactories in Vietnam, even when they already have had large factories in China.

Considering Vietnam’s opportunities, many experts suppose that Vietnam should prepare thoroughly in order not to be disadvantageous in our own house, by enforcing science and technology, developing supportive industries and improving competitive ability. If we can do well these stages, Vietnam will receive chances from future transfers.

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Bloomberg Considers Vietnam as “New Tiger” in Asia

AFTER SEVERAL DISAPPOINTING YEARS, BLOOMBERG SAID THAT VIETNAM’S ECONOMY IS CONTINUOUSLY EMERGING IN ASIA, WITH THE ADVANTAGE OF A YOUNG WORKFORCE AND IMPRESSIVE GROWTH.

According to the news, the large corporations as Samsumg, Intel have poured money into the factories in Vietnam leading Southeast Asian countries to emerge as new tiger in Asia. After renovation in the 1980s, Vietnam’s economy has grown rapidly, exceeding 7% before leveling off in recent years due to the increase in bad debt from the state sector.

According to PricewaterhouseCoopers LLP accounting firm, from now to 2050, Vietnam has become one of the largest growing economies in the world. Vietnam not only has the advantage of cheaper labor costs than China’s, but also become an ideal destination for Japanese corporations.

Mr. Vikram Nehru – senior research specialist on Southeast Asia of Carnegie Endowment commented: “Vietnam is possible to become the fastest growing economy in Asia. Just solve problems in state sector, the country can afford to develop strongly”.

Bloomberg also outlined a series of indicators showing that Vietnam’s economy is growing rapidly. In 2014, Vietnam has become one of  the largest export customers to the US market in ASEAN, surpassing competitors having a long tradition as Thailand, Malaysia.

Disbursement of foreign direct investment has also increased for 14 years, particularly in 2014 reached 12.35 billion US dollars, an increase of 7.4% compared to 2013 and higher than the $ 2.4 billion of 2000. Operation of Samsung in Vietnam is so strong that the government has allowed the group to have a separate air transportation port in Noi Bai International Airport.

Not only that, many other large companies are moving factories from China to Vietnam. Japan Kyocera Document Solutions Company which specialized in producing printer machine is making plan to increase 4 times of quantity, hence, increasing production up to 2 million units from now to May 3rd 2018. The company also said that the rest of this company will be transfered from China to Hai Phong and make plan to build a new factory here. This move also leads Vietnam to become the largest printer manufacturers for this business.

Frederic Neumann, HSBC Holdings Professionals recognizes Vietnam’s market is the market geting the most benefits when China was less competitive due to rising costs and the appreciation of the domestic currency. “Vietnam has emerged as the first alternative market for China and could benefit from this,” he said. Specifically, Bloomberg data also showed that the yuan rose 13% in the four years prior to 2014. According to the news agency, yuan rose strongest among 24 emerging economies.

This year, the VN-Index was up to 5.5% while the indices of the market such as Indonesia, Malaysia, Thailand only increased 4.1%, 2.4% and 2.2% respectively.

In addition, growth in GDP of Vietnam during 2014-2050 is expected to reach 5.3%. According to PwC, the growth ranks at the second position only after Nigeria. In contrast, China’s GDP growth is forecasted to drop below 4%.

According to Bloomberg, the new labor force is a strong support for Vietnam’s economy, compared to China. According to the United Nations, by 2012, 13% of China’s population has more than 60 years old, while only 9% of Vietnam at that age. By 2013, more than 40% of Vietnam’s population, equivalent to 90 million people, aged between 15 and 49.

In addition, cheap labor is also a big advantage for Vietnam. The average monthly wage in the country in 2013 was 197 USD, compared to Thailand (391 USD), China (613 USD). This difference will continues to widen. According to estimates by the Economist Intelligence Unit, from now to 2019, labor costs per hour of production in China will be higher than 177% compared to Vietnam when the figure was 147% in 2012.

“I still remember a few years ago, pair of shoes I bought in China manufactured in Vietnam,” John Hawksworth, expert of PwC said..

However, the bad debt and labor productivity are still the weakness of the economy that Bloomberg called “tiger-second”. While banks are still struggling to deal with subprime loans, the government itself is also confronted with the problem of state and enterprises with inffective operation. Not only that, the issues of infrastructure, corruption still exist. Vietnam ranks 119 out of 175 countries on the index chart of corruption in 2014. Besides, the pressure from the competition for the manufacturing contracts with the large corporations from neighboring countries such as the Philippines, Malaysia also create many difficulties to Vietnam.

“Knowing that a lot of potential but not sure that Vietnam took advantage of all to develop,” said John Hawksworth.

If looking at from other aspects, many experts believe that most of the operations shifted from China to Vietnam has low value. In contrast, China is aspiring to raise the value of their production chain.

According to Karel Eloot, director of Shanghai branch of McKinsey & Co, the labor productivity of Vietnam is very low and may be the largest obstacle to the economic development of this country.

Not only that, according to a expert of ING Groep NV, Tim Condon,Vietnam is also believe to become the star of the Mekong region (including Cambodia, Laos, Myanmar, Thailand, Vietnam and Yunnan province of China). Thailand used to be seen as a “tiger” before the Asian financial crisis of 1997-1998, but the last two years, exports have declined strongly. In contrast, Vietnam’s exports in 2014 increased up to 14%.

ANZ Bank forecasts Vietnam’s GDP from 2014 to 2015 will increase by 6.5% due to the increase in retail sales, industrial production and the recovery of the construction industry.

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Vietnam Supports Australian Enterprises Investing and Setting-up Business in Vietnam

DURING AN OFFICIAL VISIT TO AUSTRALIA, IN THE MORNING OF MARCH 17TH (LOCAL TIME), IN SYDNEY, PRIME MINISTER NGUYEN TAN DUNG AND HIGH-LEVEL DELEGATION TO THE GOVERNMENT OF VIETNAM HAD THE DIALOGUE WITH THE BUSINESSES OF VIETNAM AND AUSTRALIA’S ON THE DEVELOPMENT OF VIETNAM’S ECONOMY AS WELL AS THE OPPORTUNITIES, PROSPECTS FOR COOPERATION BETWEEN THE TWO COUNTRIES.

The dialogue of Prime Minister Nguyen Tan Dung has attracted the participation of hundreds of large enterprises of Vietnam and Australia in the areas of banking, finance, energy, oil and gas, mining.  Prime Minister Nguyen Tan Dung has directly answered many questions of the businesses, Australian investors relating to prospects, opportunities to promote and enhance the intrinsic comprehensive partnership between Vietnam and Australia.

Prime Minister Nguyen Tan Dung has generalized the development of Vietnam’s economy from an underdeveloped country with a closed economy and until now Vietnam has become a middle-income country with a dynamic economy, enter into the regional economy and the world’s.

Vietnam achieved GDP growth of nearly 6% in 2014. Until now, registered aboard direct investment capital is up to nearly $ 300 billion, with nearly 18,000 projects from more than 100 countries and territories. Currently, there are over 100 leading corporations investing and set-up company in Vietnam.

The Prime Minister stressed: “To attract more powerful, more efficient foreign investment, the Government of Vietnam will continue to fulfill its smooth operation and economic institutions in Vietnam market, compete equally between domestic firms and foreign firms as committed international integration of Vietnam.

Vietnam confirms continuing international economic integration deeper through the full implementation of its commitments in the WTO and bilateral free trade agreements as well as other multilateral ones. Currently we are implementing 8 free trade agreements and negotiations and will continue to expand the market, open market with other free trade agreements, especially the new generation FTA with high requirements to create competitive business environment in the ASEAN region and create a legal framework consistent with international business practice in the market of Vietnam … “

Prime Minister Nguyen Tan Dung also said that Vietnam is focusing on the three breakthrough strategies to facilitate the attraction of investment and development, business and promote economic development, which is perfect institutional market economy as well as investment in infrastructure development and training human resources, especially human resources quality.

Vietnam also continues to ensure political and social stability and protects the legitimate rights and legality of investors, including domestic and foreign; and continue to improve the rule of law, ensure and promote strong democratic liberties of the people, both economically and politically.

Prime Minister Nguyen Tan Dung has listened and directly answered many of the questions of businesses, Australian investors relating to prospects, opportunities to promote and strengthen comprehensive partnerships between Vietnam and Australia especially to promote cooperation in the field of competitive advantage, such as mining, energy, chemicals, agriculture, finance, banking, education and high quality services.

Government of Vietnam also supports Australian businesses involved in the process of restructuring the economy of Vietnam, especially in the strong field of Australia such as energy, telecommunications infrastructure, education – training, agricultural business and finance.

ANT Consulting is here to assist you from the outset; providing intelligence, information, management or support and administrative services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Market Entry
• Tax Advice
• Legal Advice
• Outsourcing Services

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or call +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

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Vietnam is Increasingly Attracting Capital from the US

VIETNAM IS TAKING EVERY OPPORTUNITY TO GROW ITS ECONOMY AND IMPROVE THE LIVING STANDARD. THIS IS NOT A VAIN DREAM SINCE VIETNAM HAS YOUNG AND PLENTIFUL WORK FORCE. THAT IS WHY MULTINATIONAL COMPANIES WISH TO COME AND SET UP COMPANY IN VIETNAM.

• Japan Increases Investment in Vietnam in Finance and Services
• Why Japan Investors Invest in Vietnam

The year 2015 marked the 40 years since the war end and the 20 years of normalized the relationship between Vietnam and the US. Vietnam began the process of innovation since 1986 but not until 1995,foreign investment in Vietnam began to flow in when the Government established formal diplomatic relations with the United States and joined the National Association of the South East Asia (ASEAN).

In recent years, foreign investment in Vietnam has accelerated. The Korean company is particularly excited with this market. Samsung Electronics is operating and building three plants at three locations – Ho Chi Minh City, Thai Nguyen and Bac Ninh. In total, this giant electronic corporation has poured more than USD 10 billion in Vietnam.

Vietnam is also expected soon to welcome a “wave” of investment from the US. The Procter & Gamble (P&G) – a consumer goods manufacturer is building a factory in Binh Duong with the cost of 100 million USD. The plant will produce Gillette razors.

Since starting operations in Vietnam in 2008, Intel is also pouring money into this market. This semiconductor giant is planning to manufacture in Vietnam the most of advanced processor for personal computers in the future.

Moreover, other big names come from the US that are expanding operations in Vietnam are Starbucks and McDonald’s. They opened their first store here in December 2013 and February 2014.

There are a number of factors that make foreign investment in Vietnam explode. One of the most important reasons is the low labor cost. Labor cost hikes in China are the reason why many multinational manufacturers turned their attention to Vietnam where the cost is 50% cheaper. Besides, the purchasing power of Vietnam consumer is increasing, inflation has been curbed and many easing regulations to boost growth are also the reason why continuous investments are poured tin..

However, the biggest attraction for most foreign investors is the Trans-Pacific Partnership agreement (TPP) about free trade in which Vietnam is one of 12 countries that participate in negotiations. In mid of this year, General Secretary of Vietnam, Mr. Nguyen Phu Trong will visit the United States. TPP agreement will be the main topic of the conversation with the US officials. If the two countries can reach an agreement, the US will become even more important partner of Vietnam’s economy in the future.

In a press conference in HCM city in January 2015, US Ambassador in Vietnam – Mr. Ted Osius was upbeat about the impact of the TPP to Vietnam economy and the US investment here. TPP agreement “will allow the US to become the number one investor and trading partner of Vietnam” he said.

In about 4.5 million Vietnamese living overseas, about 2 million are living in the US. In particular, many people have made a name in the business world. They are Mr. Henry Nguyen – who brought McDonald’s to Vietnam and Mr. David Thai – founder of Highlands coffee chain.

According to the Ministry of Foreign Affairs of Vietnam, approximately 180,000 companies in the United States are owned by Vietnamese, achieved a total revenue of 20 billion USD. Strengthening ties between the two countries could stimulate greater cash flow stream across the Pacific.

The Ministry of Planning and Investment of Vietnam is estimated to spend 500 billion USD in over 10 years to develop the infrastructure necessary for sustainable growth. However, Vietnam can only able to meet 40% of the above figure, through the Government budget, ODA and private capitals.

That is why the Government wants to attract FDI. The Vietnam Government has set a target to create an industrial economy by 2020. Six priority areas are agriculture, forestry and fisheries processing, agricultural machinery, electronics, shipbuilding, environmental and energy saving, automobile production.

The transition from growth based on FDI into industrial-based growth can be rather difficult. However, Vietnam has shown it is serious and is still on track.

ANT Consulting is here to assist you from the outset; providing intelligence, information, management or support and administrative services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Market Entry
• Tax Advice
• Legal Advice
• Outsourcing Services

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

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At ANT Consulting, we assist client to search and analyze policy and regulation that have direct implications to the business of the clients.

Policy research service in Vietnam

Policy research service in Vietnam

We offer insights on the changing policy landscape and the risks and opportunities for investors and business person.  We utilize contacts within the public and private sectors to ensure accurate and timely information.  Overall, we assist client to make an informed and better business decision through local contact in Vietnam in a management report.

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At ANT Consulting, we could assist client to study the financial strength business due diligence of a company  in Vietnam and provide useful information extracted from the local press, industry contacts, and other sources.

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We could provide:

• A report on a target company;
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We could also provide clients with an opinion as to the viability and reliability of the overseas company or individual as well as an opinion on the relative strength of that company's industry sector in target market.

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Japan Increases Investment in Vietnam in Finance and Services

Japanese investors have switched from setting up business in Vietnam in manufacturing into financial investment, retail.

Japan Increases Investment in Vietnam in Finance and Services

• Why Japanese Investors Invest in Vietnam?
• Three Reasons Japan Invests in Vietnam
• Why Japan Will Increase Investment in Vietnam

Til end of Jan 2015, Japan is the second largest foreign investors in Vietnam in direct investment form with 2,494 projects, and total registered capital of nearly 36.9 billion USD however there have been changes in the structure of the investment capital in Vietnam.  In particular, the manufacturing sector once accounted for the largest proportion of investment in Vietnam drops 30% from nearly $ 1.2 billion in 2013 to nearly 830 million 2014.  In fact, the projects in the manufacturing sector often require huge capital during a long-term investment.  In the context that Japan's economy faces difficulties as well as the global economy is not bright, the reduction of investment in the manufacturing sector is also understandable.

In indirect foreign investment in Vietnam, Japan ranks sixth in the list of countries conducting M&A in Vietnam with more focus on small or medium but long-term and potential large area.  The field of production only accounts for 10% of the total value.

However, the recent survey has shown there is a new wave of Japanese investment in other sectors such as construction, real estate, transportation or financial investment.  The report of The Japan External Trade Organization, or JETRO, a Japanese government-related organization that promotes trade and investment reflects the proportion of new investment projects in the construction, real estate increased from 3% in 2013 to 6% in 2014, while the capital had risen to 13%, compared with 2 % of a year ago.

In real estate sector, Tokyu Corporation has joined invested with Becamex IDC to develop Tokyu Binh Duong Garden City in an area of ​​over 110 hectares with a total investment of about USD 1.2 billion. Daibiru Corporation also acquired the office building Corner Stone in Hanoi with value of the deal at USD 60.1 mil.  These are example that Japanese investors recognizing the potential development of Vietnam’s changes in real estate market as the land ownership have been approved and effective from Jul 2015. As reported, M&A deals in real estate in 2014 accounted for 61% of M&A deals.

In financial investment, in 2014, Daiwa PI Partners and Vietnam Opportunity Fund of Vina Capital invested USD 45 million in the International Dairy Joint Stock Company, making foreign ownership increase to 70%.

In retail sector, Vietnam is also considered as an attractive market with growing mid-income consumer group. The largest retailer Aeon Japan after years of market research has poured more than USD 500 million for two commercial centers were opened in Ho Chi Minh City, Binh Duong and a new center in Long Bien (Hanoi).  The group also plans to expand through acquiring shares of two local supermarket being Fivimart and Citimart.

It appears that Japan is holding strong among the leading investors in Vietnam, together with Korea and Singapore.

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ANT Consulting is here to assist you from the outset; providing intelligence, information, management or support and administrative services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Market Entry
• Tax Advice
• Legal Advice
• Outsourcing Services

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779.  To learn more about us, please visit www.antconsult.vn

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