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More FDI for Vietnam from US

Mon, 04 May 2015. Last updated Mon, 01 Jun 2015 14:27

Vietnam is on the line of becoming a new tiger in Asian economy. With the support from other countries, especially US, in the future, the wish of Vietnam will come true. At present, apart from invesments from Korea, FDI for Vietnam from US is increased.

TPP Agreement, low labor cost and benefits of macro and commodity are appealing a series US companies to come to Vietnam and seek opportunities in the country. Vietnam is taking its advantages to become a new "tiger" in the regional economy (fast growth and high living standard). According to Nikkei, it is not impossible when Vietnam has a young and abundant labor force; along with the flock of many US company to the country, and better Vietnam - US relation. 2015 marks the ending 40 - year war in Vietnam, and 20 - year relation of Vietnam and the United States. Vietnam started to implement Reform in 1986. Until 1995, the first foreign investment in Vietnam flew when Vietnam government established the official relation with the US, and Vietnam joined ASEAN.

In recent years, FDI for Vietnam increased significantly. South Korean companies are particularly interested in the market. Samsung Electronics is operating and having three plants at three locations in Vietnam - Ho Chi Minh City, Thai Nguyen and Bac Ninh. In total, the electronic giant has poured more than US $10 billion in Vietnam. It is also expected soon to welcome a "wave" of investment from US to Vietnam. Consumer goods manufacturer of Procter & Gamble (P&G) is building a factory in Binh Duong with the total costs of US $100 million. The plant will produce Gillette razors. Since starting its operation in Vietnam in 2008, Intel is also pouring more money into the country. The semiconductor giant is planning to manufacture in the country the most advanced processor for personal computers in the future. The other big names of the US expanding their businesses in Vietnam are Starbucks and McDonald's. They opened the first branch here in December 2013, and February 2014.

 

Opening ceremony of the 3rd factory of P&G in Vietnam

 

There are many factors making foreign investment in Vietnam mushroom. One of them is low labor cost. The cost of labor in China is increasing, resulting in the change in the direction of inter-national companies turning to Vietnam. In addition, the purchasing power of Vietnamese consumers raised, inflation curbed, and policy loosen are factors created more investments in Vietnam. However, the biggest attraction for most foreign investors is Trans-Pacific Strategic Economic Partnership Agreement (TPP) on free trade, in which Vietnam is one of 12 countries participating in the negotiation. In mid- 2015, General Secretary Nguyen Phu Trong will visit the United States. The TPP Agreement will be the main content of talks between Mr. Nguyen Phu Trong and US officials. If two countries can negotiate, the United States will become an important partner of Vietnam economy in the future. Since then, there is more FDI for Vietnam from US.

At a conference in January in Ho Chi Minh City, US Ambassador in Vietnam - Mr. Ted Osius expressed his optimism about economy in Vietnam and US investments in Vietnam. The TPP Agreement allows the US to become the number one investors and trading partner of Vietnam. Tighten the Vietnam - US relation helps Vietnam to gain many benefits in different fields. Among 4.5 million overseas Vietnamese people, there are about 2 million ones living in the US. Many of them become famous in their business. Namely, Mr. Henry Nguyen brought McDonalds to Vietnam, and David Thai established the Highlands Coffee chain in the country. According to the Vietnam Ministry of Foreign Affairs, there are about 180,000 companies in US owned by Vietnamese people reaching the revenue of US $20 billion. If the relation between Vietnam and US is strengthened, more investment will be added in the country, and trans-Pacific.

 

Ambassador Marantis and Minister of Vietnam Planning and Investment

 

The Ministry of Planning and Investment estimated that Vietnam only needs to spend US $500 billion in the next 10 years to develop infrastructure. However, Vietnam is said to meet 40% of the figure, from State budget, ODA, and private capital. The financial lack is the reason that Vietnam government wants to attraction foreign direct investment capital. Yet, the investment is not enough for Vietnam to maintain sustainable development. The financial flow needs control and technology transfer, if the government wants industries in Vietnam developed, and a strong economic growth. Vietnam Government sets target of creating an industrial economy by 2020. 6 prioritized sectors are agricultural and forest products processing, agricultural machines, shipping, environment, saving energy, and automobile manufacture. Transition from growth based on FDI into industrial-based growth can be rather difficult. However, Vietnam shows the world that the country is still serious and developed on their right direction.

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