Outward investment at a time when foreign direct investment (FDI) decreased was the way many Vietnamese businesses overcame the global crisis of 2009.
While many banks internationally narrowed their investment scope to gather strength, many Vietnamese banks instead tried to expand their business.
Sacombank, after opening a representative office in Nan Ning, China, opened a branch in Phnom Penh, Cambodia in June 2009 and then built up the its branch in Laos in December 2009.
“Crisis is always an opportunity to make an investment. As FDI decreased all over the world, countries tried to offer incentives to lure investment. This allowed us to make investment at a lower cost, especially in terms of administrative procedures,” said Dang Van Thanh, Chairman of Sacombank.
“We may not have had such good opportunities when economies recovered,” he added.
This was also the reason why the Bank for Investment and Development of Vietnam (BIDV) contributed capital to set up BIDV in Cambodia in 2009.
The year 2009 with SEA Games 25 organized in Laos brought good luck to Hoang Anh Gia Lai Group. The group provided a fund of $19 million to build the sportsmen’s village serving SEA Games 25 and gave many other kinds of support. In return, the Government of Laos committed to allow Hoang Anh Gia Lai to harvest wood in its forests and accepted rubber projects. As such, the way Hoang Anh Gia Lai followed brought it a lot of profitable projects that it would not have obtained during more profitable times.
It is expected that Hoang Anh Gia Lai could make a profit of $100 million per annum from rubber export and rubber-made and wood-made products in little more than five years.
Also in 2009, Saigon Investment Group (SGI) signed with a representative of the Government of Laos a memorandum of understanding on carrying out a feasibility project on two hydropower projects in Hua Phan and Xieng Khoang provinces.
Tam of SGI said that the projects are capitalized at some $1.4-1.5 billion, confirming the feasibility of the projects by saying that the Government of Vietnam has agreed to guarantee Sacombank’s capital borrowings.
He said that many international financial institutions have offered to lend capital to SGI because they can see the feasibility of the projects. The Electricity Company of Vietnam has committed to purchasing the electricity when the plants start to generate power.
Many other big conglomerates have also tried to expand their reach into neighboring countries. The Vietnam National Oil and Gas Group (PetroVietnam) signed cooperation agreements with Sudanese and Angolian national oil and gas groups Sudapet and Sonagol in December 2009. Prior to that, PetroVietnam began carrying out a $243 million project in oil and gas exploration in Algeria, while a subsidiary made investment in two projects in Madagascar ($117.36 million) and Iraq ($100 million).
In 2009 alone, Vietnamese businesses had 41 outward investment projects capitalized at $1.6 billion. To date, they have invested $6.6 billion in 410 projects abroad.