Nation entices many relocating companies
Nation entices many relocating companies
Despite some good news in mobilising foreign direct investment even in the middle of a pandemic, Vietnam has not ceased in its efforts to welcome eagles and sparrows to the country to build new nests.
Pegatron Corporation, photo: Internet
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A fortnight ago, Pegatron Corporation, one of the world’s five largest electronic parts and component manufacturers, announced that it would invest $1 billion into Vietnam, and is proposing to develop a plant in the northern region, according to a source from the Ministry of Planning and Investment (MPI). Pegatron will pour $19 million as part of this capital volume into an industrial zone.
The company is also seeking permission for future projects worth $480 million, also part of the above-said $1 billion, and estimated to create 22,500 direct jobs, while contributing around VND100 billion ($4.35 million) annually to state coffers. A third phase in Vietnam worth $500 million of investment is set for 2026-2027.
Besides these plans on manufacturing of computing, communications, and consumer electronics, Pegatron is also seeking to move its research and development centre from China to Vietnam.
According to a representative of the MPI’s Foreign Investment Agency (FIA), Pegatron has been planning to relocate out of China for nearly a year. Reasons include the US-China trade dispute and an ongoing patent lawsuit with Qualcomm, which may end up costing Pegatron billions of US dollars.
This year, rumours have circulated relating to the relocation of Pegatron to Indonesia or India, attached to the manufacturing of Apple products. Pegatron currently supplies 30 per cent of total components to Apple.
With Samsung still being the biggest presence in Vietnam and the likes of Apple, Intel, and Nintendo attempting to forge new strategies in the country, other technology giants are also choosing the country as a brand new destination or for expansion plans.
“Following Intel over a decade ago, numerous companies from various countries like LG, Samsung, Foxconn, and Kyocera have already carried out huge projects in Vietnam, which enabled it to become a more promising land for the world’s other leading technology producers,” explained Phan Huu Thang, former director general of the FIA.
Foxconn, which has placed investment in Vietnam since 2007, started with small-sized projects in the northern provinces of Bac Ninh, Bac Giang, and Vinh Phuc. Last year it expanded its project in Bac Ninh, building a 600ha factory here, with further plans to pour $325 million in building affordable apartments for workers across three provinces.
Elsewhere, Winstron NeWeb Corporation from Taiwan, specialising in high-quality services for communications products, has just broken ground on its $300-million factory in the northern province of Ha Nam’s Dong Van 3 Industrial Zone.
Promoting the achievements in mobilising foreign direct investment (FDI) in recent years, the FIA is doing utmost to innovate and call for more investors into the country, especially in the context of restructuring supply chains across the world.
Do Nhat Hoang, the current FIA director general, said that collaboration with banks in mobilising FDI, especially catching up with the wave of relocations, is the most efficient method at present. Vietnam welcomed investors of all sizes providing that they bring good investments into the country.
Despite the unpredictable nature of COVID-19 and difficulties in transporting overseas, numerous online investment promotion events or bilateral talks with overseas investors have been taking place. These have helped to facilitate almost $20 billion in registered investment into Vietnam over the first eight months of 2020.
In addition to the latest movements of technology giants such as Pegatron and Apple, Millennium Corporation is planning to develop a $15-billion super gas power project in the south-central province of Khanh Hoa, while Exxon Mobil has also committed to carrying out billion-dollar projects in the country.
“Numerous investors are seeking large-scale projects around $500 million or even several billions of US dollars in Vietnam which are currently under negotiation,” Hoang said, while reaffirming that Vietnam has already prepared for the needs of investors including land, power, human resources, and strong and relevant policies.
Of these, a transparent investment climate and attractive incentives are most important to lure more giants. After issuing the amended Law on Investment in June, some legal documents which facilitate foreign investors are being compiled quickly, including a decree cutting 60 per cent of total conditional business lines and sectors off-limits for foreign investors, as well as a special project to orient and receive more relocating FDI after the pandemic. “These should be submitted to the government soon,” the FIA representative said.
MPI Minister Nguyen Chi Dung said that along with proactively approaching corporations that plan to relocate or restructure supply chains, an FDI task force has been providing general advice and proposing the most outstanding incentives to negotiate not only with Apple and its suppliers, but also more leading technology giants worldwide in order to entice them to build facilities in the country.
