More FDI Goes toward Production

 

For several months, in Dong Nam Industrial Zone (Cu Chi District, Ho Chi Minh City), investors of two major projects in the field of advanced textiles, have been actively building plants after being licensed.

 

With a total investment capital of US$140 million, British Virgin Islands-based Worldon Vietnam Co., Ltd. said that it has hired 45 hectares of land available in Dong Nam Industrial Zone to build factories producing high-end garments with the product size of 80 million products a year. The factory stage 1 is expected to officially come into operation in June 2015.

 

Similarly, the project on the production of high quality textile of Sheico Vietnam Co., Ltd. from Samoa has the investment capital of US$50 million is split into two phases.

 

In particular, phase 1 will go into production by November 2014 with the textile scale of 12,000 tonnes of product a year, 4.2 million products a year, 1.2 million life jackets a year, etc. "Upcoming investment opportunities in the field of textile of Vietnam will be huge when joining the Trans-Pacific partnership (TPP) agreement. However, the capital is divided into several phases to avoid and split risks," a representative from Sheico analysed.

 

According to the Ho Chi Minh City Export Processing and Industrial Zones Authority (Hepza), many FDI enterprises are now rushing to complete registration procedures to raise capital to expand production. Typical is the case of Pepperl - Fuchs Vietnam Co. (100 percent capital from Germany) specializing in manufacturing high-tech induction products in Tan Thuan processing park.

 

The company recently registered more than US$10 million of capital and more than 9,000 square metres of land to expand factory on 7^th April. Initially the company expected to expand its plant in Singapore but then decided to choose Vietnam because its investment environment is improving, land rent and labour is also cheaper than Singapore.

 

In the field of electronic components manufacturing, recently, many new investors from Singapore and Japan have emerged. Mr Masaharu Tsukada, General Director of Maruko Keihoki Vietnam Co., Ltd., said: "In the long term we intend to invest heavily in Vietnam. Initially we invested US$2 million. At this point, Vietnam’s investment environment has greatly improved, exchange rate remains stable and especially lately Vietnam has participated in many free trade agreements in the region and the world, which opens up opportunities for investors."

 

Mr Masaharu Tsukada said his company's project has come into operation in Tan Thuan Processing Zone (District 7). The project specializes in producing car horns, horn parts and accessories made from plastic and metal of car and motorcycle.

 

Mr Sugihara Hitoshi, General Director of Renesas Vietnam Design Co., Ltd said: "Our company specializes in design and research of semiconductor IC chip production. We have invested US$10 million to open production factories in Tan Thuan Processing Zone. Currently we are in the process of registration for increasing capital and expanding production activities. The reason we chose Vietnam is because of many factors including improving and more stable investment environment than that of many other countries in the region, which assures investors."

 

Mr Tran Viet Ha, Chief of the Investment Office of Hepza, said: "In the early months of 2014, FDI has been flowing into production, many of which are for expanding factories. Investors appreciate Vietnam’s human resource. Industries such as textile industry are benefiting from advantages brought by the TPP agreement, on the other hand taking advantage of the skill and competitive labour costs of Vietnam."

 

Mr Phan Huu Thang, Director of the Research Centre for Foreign Investment, said that the FDI in the first quarter poured into production accounts for nearly 70 percent of the total investment capital." The most important thing now is that the implemented capital in the past three months increased slightly compared with the same period last year. Exports from FDI continue to progress well, maintaining the major position of the economy in the first quarter. Although registered capital decreased from last year, other indicators remained stable and are slightly growing. This transformation takes place after a series of government’s measures. Public investment has also come back, GDP has grown better," said Mr Thang.