What Vietnam expects from multi-billion dollar projects?

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VietStock FI English - 31 month(s) ago 3 readings

Vietnam has attracted multi-billion dollar projects into the hi-tech industries by offering big investment incentives.

Samsung Electronics Việt Nam (SEV) officially inaugurated its first factory in October 2009 with the total initial investment capital of up to 700 million dollars, which was hailed as the second biggest mobile phone factory in the world.

95 percent of SEV’s mobile phones have been exported to Europe and some Asian countries. SEV has attracted 30 satellite projects capitalized at 250 million dollars in total, while the number of satellite companies may reach 200 in the near future.

Recently, Samsung Vina has put the second factory in Bac Ninh province into operation, thus raising the capacity to 100 million products in 2012. Meanwhile, the manufacturer has decided to increase the investment capital from 670 million to 1.5 billion dollars to become the leading investor in the electronics industry in Vietnam.

Intel’s biggest chip assembling and testing factory began its operation in October 2010, which churns out the latest mobile chipsets for laptops, mobile devices and microprocessors. This is a big production base not only for Vietnam, but it is also a world-class facility that many other countries in the world desire.

The products churned out from the factory have been exported to many markets. President and CEO of Intel Paul Otellini once said that clients all over the world will use the products to be assembled at the factory in Vietnam, to create the technologies that can change the world.

Canon, a Japanese multinational group well known for optical products, also has set its production bases in Vietnam. Canon Vietnam is now running the factories in Thang Long, Que Vo, Tien Son and Pho Noi A industrial zones which exported one billion dollar worth of products in 2011.

Panasonic has been unceasingly expanded in Vietnam with more new subsidiaries and big projects set up. By August 2011, Panasonic group in Vietnam comprised of six subsidiaries, including a research and development center, employing 8200 workers.

The investor has set up more and more projects recently, a part of its long term investment plan in Vietnam. In the third quarter of 2011, the construction of a new factory specializing in making electronic parts in Hanoi started. The factory is expected to begin operation in August 2012 to serve the increasingly high demand for smart phones. The factory in Vietnam is the third Panasonic’s motherboard manufacturing factory, together with the ones in Japan and Taiwan.

It plans to establish a new washing machine factory, the biggest one in Asia, in Thang Long 2 industrial zone in 2012.

Recently, Japanese Kyocera Mita Group kicked off the construction a printing and photocopier factory in Hai Phong City, which is expected to employ 5000 workers. This is the second biggest factory of the Japanese group, just to the one in China.

Nokia, the leading mobile phone manufacturer in the world, also decided to spend 280 million dollars to build a factory in Vietnam, slated for operation in early 2012. The fact that Nokia chooses Vietnam, not Indonesia, Thailand or Malaysia, shows that Vietnam is really an attractive destination.

Tran Quang Hung from the Vietnam Electronics Manufacturers’ Association has noted that foreign manufacturers tend to relocate electronic part production bases to Vietnam. It is because Vietnam has a big land fund with the workshop premises on advantageous positions and convenient for production, and the cheap labor force. Especially, investors have been flocking to Vietnam because the country, considering electronics a hi-tech industry, always offers attractive incentives.

Foreign invested projects in the electronics industry will surely help develop the Vietnamese electronics industry. The projects aim to export their products in the first phase of operation, but later, the products would be used in Vietnam as well. Besides, the employment of the hi-tech factories is believed to help generate a skilful labor force for Vietnam.

However, Hung has noted that the hi-tech projects now just aim to take full advantage of the land and labor force in Vietnam.

Making electronics parts will not be enough to develop an industry. Vietnam will still need to have good designers, or it will never have the products of their own.

Also according to Hung, in the last 10 years, foreign investors nearly have not trained Vietnamese designers. They only try to train the workers to supervise the production lines and provide the post-sale services.

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