15:15 | 04/05/2015 Investment
(VEN) - A program for development of the information technology (IT) industry to 2020 with a vision to 2025, which was recently approved by the prime minister, set a target of attracting many foreign direct investment (FDI) projects in the hardware industry between now and 2020.
The Vietnamese hardware industry has attracted many FDI enterprises
US$5 billion in FDI to be attracted to the hardware industry
The program set a target of attracting an additional US$5 billion in FDI to the hardware industry from now to 2020. This target is feasible, as many major international electronics giants have come to Vietnam to establish hardware manufacturing facilities. Intel has a chip plant in Ho Chi Minh City, while Microsoft has a Nokia smart phone assembly plant in Bac Ninh Province and Samsung have two factory complexes in Bac Ninh Province and Thai Nguyen Province. Samsung has so far invested more than US$12.6 billion in Vietnam, including US$5.4 billion invested in 2014 alone.
According to the Ministry of Information and Communications, while FDI decreased and economic difficulties remained, many foreign businesses, including Samsung, LG, Microsoft, Panasonic, Canon, and Intel, among others, kept investing and or expanding investment in Vietnam. This shows that Vietnam remained an attractive destination for foreign investors in the field of information technology in general and the hardware industry in particular. Actually, the vast majority of the Vietnamese hardware industry’s revenue came from FDI enterprises, to which Samsung facilities in Bac Ninh and Thai Nguyen making the biggest contributions.
According to the Vietnam Chamber of Commerce and Industry (VCCI), Vietnam has proper policies so it has attracted foreign hardware industry investors. Foreign investors benefit from many tax and fee incentives and pay an enterprise income tax of only 10 percent during the whole life of their projects. Abundant human resources and low labor cost also helped attract foreign investors to Vietnam.
‘Made in Vietnam’ products targeted
The program clarifies the need to invest in hardware research, design and production in which Vietnam has advantages, as well as the manufacturing of products for security and safety purposes, microchips, electronics, semiconductors, and the development of support industries in the field of hardware and electronics.
Hardware and electronics currently account for almost 90 percent of the IT industry’s revenue. Vietnamese electronic products were mainly manufactured according to the designs of foreign partners, and very few products were designed and made by domestic companies so domestic companies’ products remain poor in terms of added value and competitiveness. Therefore, increasing the product’s local content is important.
To do that, Vietnamese businesses need to transform their product structures, shifting from the production of household to specialized electronic appliances, and from assembling products to design and produce products and spare parts.
A Vietnam Electronic Industries Association (VEIA) representative said that worldwide, research and development (R&D) is the main trend of the IT industry in general and the hardware industry in particular. Here in Vietnam, Bkav and Viettel have built their business strategies according to this trend.
A Viettel Group representative affirmed the Vietnamese market is offering new opportunities for hardware industry development and that Vietnam is fully able to access and control complicated technologies such as microchip circuit; it only has difficulties in production of these products.
By Quynh Nga