Foreign investment begins year with a bang
Foreign investment begins year with a bang
Viet Nam is expected to attract a wealth of foreign direct investment (FDI) this year after a bumper January kickstarted efforts with a total FDI registration of over US$280 million.
The figure is largely comprised of $202.9 million in processing industries, representing 72.1 per cent of the total sum, followed by $50 million in the real estate sector and $13.9 million in scientific and technological projects.
Japan remains the largest investor with its total licensed FDI capital of $157.7 million making up 56.1 per cent of the January figure, followed by Thailand with $54.2 million licensed investment and France’s $20 million contribution.
The influx of Japanese FDI is forecast to continue rising in Viet Nam. In addition to the processing and manufacturing industries, Japanese investors have also shown interest in services and retail sector projects in Viet Nam, according to the Vietnamese Government’s website.
The Japan External Trade Organisation (JETRO), has predicted a possible third “boom” of Japan FDI investments in Viet Nam. Hirokazu Yamaoka, chief representative of JETRO in Ha Noi, was quoted by the website as saying Viet Nam remains in most Japanese investors’ plans for business expansion across the information, software, retail-wholesale and health sectors.
Economists also proposed that Viet Nam should ready itself to greet a new wave of Japanese investment in the country by taking a proactive role in improving the local investment environment.
The January 2013 FDI figures also show that Viet Nam remains a magnet for foreign investors despite the shrinking FDI inflows faced during the recent economic difficulties.
In 2009, Viet Nam’s FDI income plunged by around two thirds against 2008 and has since dropped to roughy $10 billion. The fall was mostly attributed to the global economic downturn.
Dr. Tran Du, General Secretary of the Viet Nam Association of Foreign Invested Enterprises told the Government Website that the situation saw slow improvements sparked by large-scale real estate schemes and the country initiated a new policy on practical FDI projects.
But the problem worsened in 2011 as Viet Nam’s inflation rate reached 19.58 per cent - the highest in Asia – and firms were put off by soaring production costs and an unstable climate.
However, the Government got to grips with the problem and by 2012, Viet Nam was rated as the second largest FDI recipient in Southeast Asia thanks to its cheapest labour costs and newly competitive business environment, according to the latest report from Hong Kong and Shanghai Bank (HSBC).
According to the bank Viet Nam is still a dynamic economy which specialises in low-skilled manufacturing industries like garments, textiles and footwear.
Meanwhile, a recent ASEAN Business Council survey ranked Viet Nam as the second most attractive investment destination behind Indonesia, but ahead of Singapore, Thailand and Malaysia.
Experts predicted that closer diplomatic ties between Viet Nam and countries such as Japan, the US and Russia would open up more opportunities for FDI inflows.
More people going abroad
Jet-setting Vietnamese travellers made some 3.5 million foreign trips in 2012 representing a year-on-year increase of 20 per cent, according to figures from the Viet Nam National Administration for Tourism (VNAT).
China, Cambodia and Thailand were the most attractive destinations for Vietnamese travellers, who spent over $3.5 billion on their overseas tours, Vu The Binh, Deputy Chairman of Viet Nam Tourism Association, told local media.
According to local tour operators, the numbers of Vietnamese booking outbound tours has increased significantly in the past couple of years and their spending on these trips are “relatively high”.
Despite this, the amount spent by Vietnamese travellers on their “outbound” trips in 2012 equaled just fifty per cent of the revenues brought by foreign visitors to the country last year. VNAT’s figures revealed that in 2012, Viet Nam welcomed 6.8 million foreign visitors, attaining total revenues of nearly $7 billion.
Binh added that although more Vietnamese were taking flight, their outbound tours were not well organised and managed.
These challenges facing local tour operators will be discussed at the Viet Nam International Tourism Fair due to run in Ha Noi between April 18-21 2013. 500 million litres of beer for Tet
Thirst for beer unabated
Economic turbulence and high inflation rates have by no means dampened the Vietnamese fondness for beer during Tet.
Brewery manufacturers estimated that some 500 million litres of beer have been consumed during this year’s Tet – the Lunar New Year of the Snake.
Sai Gon Brewery Co (Sabeco) remains the biggest manufacturer with 260 million litres of beer expected to be consumed, followed by Viet Nam Brewery Ltd. (VBL) with 100 million liters and Ha Noi Beer, Alcohol and Beverage JSC (Habeco) with the same amount. Imports and produce from 350 other breweries nationwide were anticipated to account for the remaining 40 million litres of beer consumed by the local market.
Despite the huge volume of supplies, beer prices continued to rise at local markets during the days before Tet.
Prices of Sabeco’s three main products increased by five per cent from January 15.
Market demand was relatively high with its 333 sales up by 11 per cent and Saigon Red up by 23 per cent in comparison with the same period last year.
A survey conducted in 36 cities nationwide has found that Vietnamese prefer Saigon Red products (28.1 per cent), followed by 333 (16 per cent), Hanoi beer (11.4 per cent) and canned Heineken (10 per cent).
It was the import tariff reduction from 45 per cent to 30 per cent in 2012 which precipitated the increase in imports. It is estimated that nearly 100 import products bearing 40 well-known brands are now available in the domestic market.
Products sourced from Germany, Belgium, France, Czech, Russia, the US and Japan have been selling very well in Viet Nam, even though they are 4-10 times more expensive than domestically made products.
Euromonitor International, a market survey firm, pointed out that Viet Nam is the biggest beer consumer in South East Asia with 2.6 billion litres of beer sold in 2011.
Kirin Holdings, a well known brewery manufacturer from Japan, has also listed Viet Nam among the 25 thirstiest countries in the world, with average consumption increasing by 15 per cent per annum.
Over the past decade, beer consumption has increased by 200 per cent, as beer output rose from 1.28 billion litres in 2003 to over 2 billion litres in 2008 and 3 billion litres by 2012.
This now equates to each Vietnamese consuming 28 to 30 litres per year.
These figures make Viet Nam the third biggest beer consumer in Asia, just behind Japan and China, the Sai Gon Tiep Thi (Sai Gon Marketing) newspaper reported.
According to the Ministry of Planning and Investment, Viet Nam has some 350 breweries throughout the country, including 20 breweries with capacity of over 20 million litres per year.
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