09:52 | 23/07/2015 Cooperation
(VEN) - Foreign direct investment (FDI) flows from the US to Vietnam have increased from zero to the US pursuing an ambition of becoming the number-one investor in Vietnam.
Prior to the normalization no US companies officially invested in Vietnam due to the US trade embargo on Vietnam. However, US multinational corporations had realized the great potential of the Vietnamese market and invested in Vietnam through third countries. Since former US President Bill Clinton announced the lifting of the US trade embargo on Vietnam on July 12, 1995, and the US-Vietnam Bilateral Trade Agreement (BTA) signed in 2000, there has been an increasing wave of US investment in Vietnam.
Giants from beverage, information technology, software, automobile, and energy sectors, such as Coca-Cola, PepsiCo, P&G, IBM, Cargill, Microsoft, Chevron, Ford, GE, AES, and UPS, have successfully invested in Vietnam. Coca-Cola and PepsiCo have become reputable brands in the Vietnamese beverage market over the past two decades. In 2010, PesiCo announced its decision to invest an additional US$250 million in Vietnam, and two years later, it acquired San Miguel’s Dong Nai factory. PepsiCo has also invested US$70 million in building its largest factory in Southeast Asia, which is based in Bac Ninh Province.
Looking towards the number-one position
P&G has also increased investment in Vietnam three-fold since 1995. In March, it broke ground to build a Gillette razor plant with most of its products set for export to Asian markets.
In the field of manufacturing, Microsoft owns a mobile phone plant worth over US$300 million in Bac Ninh. Intel has decided to move its manufacturing activities from Costa Rica to Vietnam and plans to move its mainboard and microprocessor manufacturing activities from Malaysia to Vietnam and another country.
By May 2015, the US had 742 investment projects in Vietnam with total registered capital of over US$11 billion, ranking seventh among 101 countries and territories directly investing in Vietnam. From Vietnam’s participation in a number of trade agreements with large markets, the establishment of the ASEAN Economic Community in the near future, and especially the Trans-Pacific Partnership (TPP) agreement that is expected to be signed at some point in the future, US businesses have seen great potential for further investment in Vietnam, and they expect the US will become the number-one foreign investor in the country.
In the opinion of American Chamber of Commerce in Vietnam Chairman Gaurav Gupta, the government needs to accelerate institutional reforms and improve the business environment, while at the same time putting in place suitable policies to ensure effective human resource training. Furthermore, the government needs to continue maintaining macroeconomic stability. “US businesses highly appreciated the Vietnamese government’s efforts to control foreign exchange rates, promote GDP growth and improve policies. If these efforts continue, US FDI in Vietnam will increase,” he said.
Former US President Bill Clinton, who announced the lifting of the US trade embargo on Vietnam in 1995, was present in Vietnam on July 2 to attend the 20th anniversary of the normalization of diplomatic relations between the US and Vietnam.