Socialist Republic of Vietnam sees manufacturing investment from US and Taiwan soar as economy expands by 8% p.a.
Wilbur Ross and his WL Ross & Co. made US$380 Mn. in an afternoon selling their interest in International Steel group - and had a brief (and unsuccesful foray) foray through his International Coal Group in UK Coal plc announced a major investment in Communist Vietnam (More correctly Cộng hòa Xã hội Chủ nghĩa Việt Nam - Socialist Republic of Vietnam) on June 19th 2007.Vietnam was accepted into the WTO on November 7, 2006 just before a historic visit by George Bush (President of the United States)for the 14th APEC summit in November 2006 - that's him with President Nguyen Minh Triet and Uncle Ho looking over his shoulder - George was defending Texas at the time the US were exporting democracy to Saigon.
With Ho Chi Minh City based Phong Phu Corporation, a major cotton textile and clothing manufacturer , Ross's International Textile Group is investing heavily in a joint venture and developing a joint strategic investment footprint in Vietnam.Vietnam is the third-largest oil producer in Southeast Asia with output of 400,000 barrels per day - and the second largest rice exporter in the world after Thailand.
ITG’s Burlington WorldWide division and Phong Phu have been partners since June last year in a previously announced an $80 million cotton fabric and clothing manufacturing complex under construction in Da Nang, Vietnam, (Tourane province under the French) the site if the USAF's largest base in the Vitenam war. The Burlington Co pants manufacturing operation will commence employing up to 500 operatives from the end of October . Expat website
Now they have signed a Memoranda of Understanding with President Nguyễn Minh Triết, to discuss any potential privatization advisory" that WL Ross "with its proven investment expertise, can provide." This also commits them to explore various real estate related joint ventures and the other looks to a potential WL Ross strategic investment in the currently state-owned Phong Phu "as the latter privatizes through an initial public offering."
Wilbur L. Ross, Jr., WL Ross & Co.’s founder and chairman said "Vietnam is among the most rapidly growing countries in the world and we are delighted to have the opportunity to commit additional capital to support that growth. We are especially eager to broaden and deepen our relationship with Phong Phu and are committed to help that management to change from being a State Owned Enterprise to becoming a privatized business. "WL Ross and Phong Phu are parties to two of the three agreements signed here today.
One commits them to explore various real estate related joint ventures and the other looks to a potential WL Ross strategic investment in the currently state-owned Phong Phu "as the latter privatizes through an initial public offering."
In addition, the two will discuss "any potential privatization advisory" that WL Ross "with its proven investment expertise, can provide."
Phong Phu Textile Co. is currently a state-owned company with over 5,000 employees. They have another joint venture, Coats Phong Phu., Ltd. (CPP) between Coats Holdings Ltd. and Phong Phu Textile Company (Vietnam). It was established on July 25th, 1989. The total capital investment is US$14.6 million that is contributed 75% and 25% respectively by the foreign and Vietnamese partners.
CPP has 2 factories located in Ho Chi Minh city and Hanoi and 1 representative office in Danang. CPP is currently the leading thread supplier in Vietnam with nearly half of the total market share and approximately 800 customers.
Taiwanese companies expand in Vietnam in preference to China as incentives are offered
Taiwan’s Hon Hai, the world’s largest (and fastest growing) electronics parts maker, and Compal, the second-biggest contract laptop manufacturer,recently announced a combined $5.5 billion in investments in production facilities in Vietnam.
China has scrapped value-added tax rebates on certain export lines and introduced measures to discourage low-end export-processing trade - the practice of assembling imported components into finished goods for re-export.
Seizing the opportunity Vietnam is offering (very) generous tax breaks and rent-free land to selected foreign investors.
Thailand and Cambodia are trying to muscle in on the act, seeking to divert some of the money that might previously have flowed to China, before the authorities began to get worried by signs the economy was overheating.
Taiwan is now the third-largest foreign investor in Vietnam, with cumulative investment of US$9.1 billion through July, according to Vietnamese Government information.
Taiwan government data showed that investments it approved in Thailand more than tripled in the first half of the year, compared with just a 2.5 % gain for China.
Hon Hai plans are to to boost investments to $5 billion in the next 2/3 years as the Vietnamese economy has expanded more than 8% a year over the past few years.
Tax incentives are also key: one Hon Hai unit managed to get a four-year corporate tax waiver and a 50 % tax waiver for nine years after that for a planned investment in Vietnam’s Bac Giang province, according to the Vietnamese government.
Notebook PC maker Compal Electronics has also been given huge incentives to build its planned US$500 million plant in Vietnam, including a 10-year corporate tax exemption and rent-free land in exchange for using locally made parts.
Pic is the Krait Snake relatively common in Vietnam . This striking black and white banded snake is nocturnal and one of the most dangerous snakes in Asia, and bites without hissing. In addition to this, the bite which injects a powerful nuerotoxin not unlike the cobra's ,is virtually painless, but often fatal, especially if ignored. Deaths from this snake are probably under reported, since most occur at night and unattended.
"Vietnam is a remarkable country. For decades you had been torn apart by war. Today the Vietnamese people are at peace and seeing the benefits of reform. The Vietnamese own their own businesses, and today the Vietnamese economy is the fastest growing in Southeast Asia. Vietnamese students have great opportunities here at home and broad. The Vietnamese people are traveling around the world and sharing this ancient culture with peoples of the world. And the United States, as well as other APEC partners, look forward to strengthening our ties."
President George W. Bush November 17, 2006
See a previous post about Vietnamese investment here.