15:18 | 01/08/2015 Investment
A series of high-tech FDI projects in Viet Nam have increased investment capital and extended production scale with a view of seizing every opportunity offered by the “new generation” of FTAs.
Viet Nam is negotiating more FTAs bilaterally and regionally.
Besides the Trans-Pacific Partnership Trade Agreement (TPP) with a combined population of 800 million (accounting for 38% of the global GDP), the EU-Viet Nam FTA would open up a plenty of opportunities when 90% of made-in-Viet Nam products enjoy zero percent tax.
Benefiting mostly from FTAs would be agriculture, aquaculture, garments and textiles, and footwear and exports, accordingly, would likely surge by 30-40% and imports, up 20-25%.
The newly-signed FTAs have created sizeable values.
The Viet Nam-RoK FTA generated more export opportunities for garment, textile, furniture and agricultural products. Meanwhile, the Viet Nam-Eurasian Economic Union (EAEU) is expected to bring the two-way trade volume from US$ 4 billion to US$ 10 billion within the next five years.
FTAs, especially TPP, as well as the upcoming ASEAN Economic Community (AEC), are expected to boost exports, FDI inflows, generate more jobs, and spur added value, said Dr. Le Dang Doanh.
According to the economist, the Vietnamese economy would be able to quickly access new technologies and broaden market shares. Meanwhile, enterprises would join deeply into the global value chain.
He predicted that TPP would help the garment and textile sector pocket US$ 30 billion in export turnover by 2020 and US$ 55 billion by 2030. Mr. Doanh also forecast that Viet Nam and Japan would enjoy huge opportunities for cooperation in agriculture and aquaculture.
Dr. Tran Dinh Thien, Director of the Viet Nam Institute of Economics, underlined that Viet Nam would benefit largely from TPP, especially increasing her trade linkages with the U.S. (the biggest market in TPP), absorbing increased FDI inflows, driving economic growth, and having remarkable tax cut.
In the first half of 2015, total newly-registered and additional capital in the country touched US$ 5.49 billion, accounting for 80.2% of the same period last year. However, the amount of FDI disbursed hit US$ 6.3 billion, a significant year-on-year surge of 9.6%. The manufacturing and processing industries were the most attractive sectors by absorbing US$ 4.18 billion (76.2% of total investment) with 338 newly-registered FDI projects and 190 added capital ones.
New wave of FDI inflows
Lately, Bel Vietnam, the manufacture of Laughing Cow-brand cheese on July 8 broke ground for a US$17-million cheese factory in the southern province of Binh Duong with a total area of 17,000 meters. The new factor would initially come into operation in mid-2016 and run fully in 2020. The output would grow almost nine-fold.
Bel Vietnam CEO Chafiq Hammadi affirmed that the new factory serves the company’s long-term development strategy to become a product supply hub in Viet Nam and Southeast Asia.
“The company would take advantage of skilled labor force and preferential policies of the ASEAN Economic Community to serve the whole region. In the short term, Bel Vietnam would focus on the Philippines, Cambodia, Thailand, Singapore, Malaysia, Laos, then Indonesia and Myanmar”, said Mr. Chafiq Hammadi.
A spate of big Korean names also decided to expand their operation in Viet Nam.
Especially, Samsung, the largest Korean investor in Viet Nam poured around US$ 12 billion in four projects namely Samsung Electronics VN (SEV) in the northern province of Bac Ninh; Samsung Electronics Viet Nam Thai Nguyen (SEVT); Samsung Vina Electronics (SAVINA) in HCM City; and Samsung Electronics Ho Chi Minh City Complex (SEHC).
According to the Ministry of Planning and Investment, in 2014, the RoK giant earned US$ 26.3 billion in export turnover in Viet Nam. The figure was projected to hit about US$ 32 billion this year.
Other FDI projects on high-tech and added value also selected Viet Nam as a gateway to penetrate into the region when the country would join FTAs like TPP and AEC.
LG Electronics invested US$ 1.5 billion in its largest facility in Southeast Asia at Trang Due Industrial Park which manufactures and assembles such hi-tech products as TV sets, mobile phones, washing machines, air conditioners and digital equipment for automobiles for domestic consumption and export.
Meanwhile, other big foreign players have also quickly flocked in in hope of benefiting from TPP as 12 countries negotiating the TPP don’t include China, India and Thailand.
Japan-based Itochu, for example, spent US$ 9.25 million to own 3% of the VietNam National Textile and Garment Group (Vinatex) and invested in a large-scale project in Viet Nam./.