Negotiations for Vietnam-US billion-dollar deals

Negotiations for Vietnam-US billion-dollar deals

The negotiations with US billion-dollar companies on investments in Vietnam are often filled with drama.

Intel’s story

After seven years in Vietnam, Intel in late 2014 announced its plan to turn Vietnam into its global chip production base, which is expected to satisfy 80 percent of market demand.

Later, Intel decided to relocate its factories from Costa Rica and Malaysia to Vietnam.

In 2006, Intel entered Vietnam with modest initial investment capital of $300 million. Just 10 months later, it decided to raise capital to $1.2 billion, a huge amount of capital compared with other foreign-invested projects at the same time.

It might be unknown to many people that Intel is a special exception in the Vietnam’s history of attracting foreign direct investment.

Professor Nguyen Mai, former chair of the State Committee on Investment & Cooperation, related that Intel once made 29 claims to the government in exchange for its investment in Vietnam.

Of these, Vietnam could satisfy six to seven demands in line with Vietnamese laws, while three to four claims were completely contrary to the Vietnamese laws. As for the other claims, the government needed to consider thoroughly before giving the answer to the investor.

“Intel demanded a support package up to $90 million in exchange for its decision to invest in Vietnam,” Mai said.

At that time, Mai was the head of the taskforce in charge of Intel’s project, put under direct command by the Prime Minister. The only task of the taskforce was luring Intel to Vietnam.

At the time when Intel was negotiating the investment project in Vietnam, in 2004-2006, Vietnam was seriously eager for investment capital. It then witnessed hot economic growth, but no US big investor had invested in the high-technology sector in Vietnam at that time.

Vietnam then decided that it must not miss the opportunity to invite Intel to Vietnam. The US giant in 2004 stated that India, Malaysia, China and Vietnam were the four countries the group was considering to set up factories within 18 months.

After negotiating rounds, Intel finally chose Vietnam, accepting the fact that three to four claims would not be satisfied. However, Intel got financial support of $50 million.

And in return, it decided to raise investment capital to $1.2 billion. Intel’s chip factory in Vietnam now employs 3,200 Vietnamese engineers.

Mai, when recalling the days of negotiation, noted that Intel’s case was unprecedented in Vietnam’s 30-year history of attracting foreign direct investment.

“Though it is quite normal for the government to give financial support to invite international groups to Vietnam, Intel was a very special case,” he said.

vietnamnet