In a recent research about the effects of joining the TPP, Viet Nam Institute for economic and policy research (VEPR) suggests that foreign direct investment in Vietnam will double to about 13 billion USD, this level of FDI is almost similar to the amount of FDI in Japan while double the amount of FDI in Australia and Malaysia… The reason is Vietnam has a couple competitive advantages such as cheap, skilled labor and variety of raw materials for other industries.
INCOMING INVESTMENT PROJECTS
In November 18th, Cargill, Inc. announced that they will invest more in Vietnam. First, they will set up a brand new 30 million USD cattle feeding production factory in Binh Duong, which will be finished and ready to go in the middle of 2017; the projected production level is 260,000 metric tons a year. In addition, Cargill, Inc. has negotiated with Saigon International Terminal to build a store house that can stockpile about 80,000 metric tons of agriculture products in Phu My; the total cost of this project is about 10 million USD. Mr. David MacLennan, CEO of Cargill, Inc., agrees that Vietnam is one of the most important business partners and once the TPP is ratified, it will be even more convenient doing business here. As a result, investing in more projects at this moment is their prioritized strategy.
Most recently, in 26th of November, Carlson Rezidor Hotel Group, one of the world’s largest hotel groups, has signed a new contract to develop a world class resort in Cam Ranh Bay with their Vietnamese partners: Eurowindow Nha Trang, SJC. This resort is open for business in the first Quarter of 2019. Mr. Thorsten Kirschke, President of Carlson Rezidor Hotel Group’s Asia Pacific Region, states that Vietnam still has many potentials to develop more hotels and resorts; in addition, Vietnam is an important part in his company’s plan to expand their business in Asia. He also noted that the project in Nhatrang is the starting points, in the near future, his company will bring in more investors to other places in Vietnam such as Phu Quoc, Hanoi, HCM city etc…
HanesBrands (NYSE: HBI), one of the leading companies in American textile Industry, has 8 years of doing business in Vietnam and 3 factories in Hung Yen and Hue, recently announced an increase n their investment budget in Vietnam to 55 million USD, a 11 million increase compares to 2014. Talking about this decision, Mr. Ajay Godbole, directors of Asia region of HanesBrands, shares that this is a preparation step to a big expansion once Vietnam has ratified TPP.
When Vietnam joins TPP and AEC, many foreign investors are considering Vietnam as an attractive and favorable opportunity to do business. Not only agriculture, manufacture, service, tourism firms but also high tech fimrs such as Samsung, LG, Microsoft, Jabil… are investing in Vietnam with total investing budgets of billions of dollars. Samsung alone has accounted for more than 14 billion USD. On the other hand, International retailer such as Aeon, Auchan, Metro, Cash&Carry, BigC, Lotte… are expanding their market share in Vietnam. According to Ministry of Planning and Investment, there is already 290 billion USD in FDI guaranteed to invest in Vietnam.
Favorable policies
To utilize the benefits of Vietnam joining TPP, other provinces have drafted new laws to improve business environment for foreign investors; such as: increasing competitiveness and improving government’s employees’ efficiency to attract more FDI.
One good example of applying these new reforms is HCM city, financial capital of Vietnam. This city is constantly improving infrastructure to attract more investors. As a result, the number of FDI projects in HCM city is highest in Vietnam. In 2015, HCM city has attracted more than 425 million USD, a 50% increase compares to last year; in the first 6 months of 2015, British firms are the biggest investors in HCM city (59% of total FDI,) followed by British Virgin investors (15% of total FDI) and South Korean (10% of total FDI.) Recently, HCM city has announced the openings of 7 new industrial parks with a total area of 2,000 ha to welcome new firms in textile, service and food processing industries.
In addition, the existing industrial parks are increasing their investment in industrial infrastructure to get ready for the incoming investors. Mr. Nguyen Van Hung, chairman of Becamex IDC, shared that in the middle of September 2015, Becamex IDS has started the construction of an industrial and urban complexes, called Becamex-Binh Phuoc, with the total area of 4,633 ha in Binh Phuoc to get ready for the new wave of increasing foreign investors
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