US enterprises lead new wave of investment in Vietnam
VNECONOMY updated: 29/06/2007
Mr Vu Tien Loc, Chairman of the VCCI.
Mr. Loc said that up to 150 Vietnamese companies accompanied the President to the US and this was a message showing Vietnam’s desire to strengthen economic relations with the US. The visit is hoped will contribute to promote the investment wave of the US into Vietnam. That’s why the Vietnamese mission spent a lot of time meeting with American CEOs and groups.
“Recently we have heard much about the new wave of investment in Vietnam. That’s the investment wave of leading world groups in finance and hi-tech into Vietnam. I believe that with their capital, technology and market, American investors will lead the new wave of investment into Vietnam and soon become the number-one investor in Vietnam,” Mr. Loc said.
Large contracts signed during the Vietnamese President’s US visit
1. The Saigon Investment group and Tan Tao Industrial Zone Development Company signed an agreement with American partners to build a complex of seaport industrial zones, a 3,600MW thermo-power plant, and a loan, totalling $4 billion in value.
2. Electricity of Vietnam group (EVN) signed a gas trading and gas development contract worth $4 billion. The group also signed a $100 million loan contract with Citbank to build a hydropower plant.
3. TVN signed a contract with CitiGroup on bond issuance consulting worth VND3 trillion ($187 million).
4. The Bank for Agriculture and Rural Development of Vietnam (Agribank) signed an agreement on buying Microsoft Office software copyright and other agreements with US banks worth $700 million.
5. The Vietnam Shipping Lines Corporation (Vinalines) signed a contract with SSA Marine to build the Cai Lan seaport, worth $500 million. It also signed a contract to borrow $175 million from CitiGroup to build seaports.
6. The Saigon Securities Trading Company and Credit Suisse signed a contract on a $100 million credit.
7. Phong Phu Textile Company and ITG signed a contract on textile-garment cooperation worth $100 million.
8. SOVICO and NBH Group signed contracts on energy, crude oil investment and establishing an investment fund in Vietnam, totalling $600 million.
9. Mai Linh Company and Texas Tech Group signed a contract to build a $100 million hospital.
10. Hoang Quan Real Estate Company signed a contract to build a $30 million technology university in Vietnam and an agreement to sell its stocks to IndoChina Capital, worth $100 million.
What do you think about the contracts that Vietnam and the US signed during the recent US visit by President Nguyen Minh Triet?
During the President’s visit, I saw that American businesses are very interested in investment in Vietnam through big projects in important areas of the economy. The two sides signed many important agreements and contracts worth around U$11 billion. This is a meaningful, record figure.
Contracts signed during the visit include large projects on infrastructure such as building seaports, power plants, industrial zones, residential areas, those to develop the financial market and financial institutions in Vietnam, hi-tech projects in the fields of information technology and telecom, import-export contracts and projects on education and training, specifically the agreement to establish a technology university in Vietnam.
Along with a record number of contracts, the quality of projects is also high. We know that the US is the best in the world in infrastructure development, hi-tech and education. Meanwhile, Vietnam needs to strongly develop those fields to boost modernisation and industrialisation. Contracts signed on this occasion are suitable to the advantages of each side.
The flow of US investment running into Vietnam through those contracts are in various forms, from wholly foreign owned or joint venture, portfolio investment through buying stocks of Vietnamese companies, and US provisions of credit for Vietnam’s imports to serve its projects in Vietnam.
The two sides also discussed other projects and I hope that in the coming time, many new projects will be signed. Thus, the results of this visit don’t include already signed projects but projects for the future.
Among signed projects, which impress you most?
All projects signed in the US are important, meaningful and impress me in different ways.
For example, large projects on infrastructure development such as seaports or power plants have huge capital and are very important to the development of Vietnam. Even small-scale agreements such as the agreement between the Vietnamese and US stock exchanges or the Vietnamese Government and businesses buying Microsoft software copyright, which are only worth several tens of millions of US dollars, are still very meaningful in terms of intellectual property protection and pave the way for hi-tech investment into Vietnam. Hi-tech investment always goes with intellectual property protection.
Another example is a $30 million project to build a university in Vietnam. $30 million is not large in the total number of $11 billion but it is a pioneer project for Vietnam-US cooperation to build universities in Vietnam.
We wants to cooperate with the US to develop top-tier universities in Vietnam, so besides government agencies, Vietnamese companies are also seeking cooperation with American partners in this area. This is a field with potential for Vietnam-US cooperation.
We can see that contracts and agreements signed during the visit are quite comprehensive, covering many fields. There are big ones with billions of US dollars of capital and there are small ones which have great meaning because they mark the first cooperation between the two sides in new areas.
In this visit, what did we do for the textile-garment supervision issue, which is hindering Vietnam’s exports to the US?
Since Vietnam has become a WTO member, there are still barriers from the two sides, firstly the technical barrier like the supervision on Vietnam’s textile-garments. At meetings with US partners during this trip, we suggested lifting that barrier to boost Vietnam’s exports to the US and Vietnam’s imports of US hi-tech products. The American Importers’ Association confirmed that the application of the supervision mechanism on Vietnam’s textile-garments was a violation of WTO rules and was unfair.
The Vietnam Textile-garments Association will work closely with American importers and Government agencies to ask for the removal of this mechanism. We have reasons to affirm that Vietnam’s textile-garment exports don’t influence the US textile-garment industry.
Such problems can continue to appear through commercial lawsuits such as anti-dumping lawsuits so Vietnamese enterprises need to cooperate with not only the community of local businesses but American partners to create a common voice to lift barriers in economic ties.
What agreements did Vietnam and the US reach to assist enterprises of both sides in trade and investment relations?
During this trip, VCCI and the American Chamber of Commerce reached an agreement on establishing the Vietnam-US enterprise forum. The forum will be a regular mechanism of the Vietnamese and US communities of business to exchange information on trade, investment and policies. It will also promote trade and investment cooperation between the two sides. It will be set up soon to connect Vietnamese and US businesses.
In addition, the two governments signed the Trade and Investment Framework Agreement, a following step of the Vietnam-US Bilateral Trade Agreement and a step towards the Vietnam-US Free Trade Agreement. The two sides also established the investment-business consulting council. These are the foundations for Vietnam-US economic cooperation at higher levels.
Along with promising results through the President’s US visit, Vietnam is receiving the interest of many foreign investors. What should we do to take advantage of the new wave of investment?
The investment environment of Vietnam in the WTO era has undergone important changes but we are still facing fierce competition from other economies, which are also trying to improve their investment climates, such as China, India, and ASEAN countries. Before making investment decisions, foreign investors always compare Vietnam to other countries. Vietnam is now in the eyes of big groups so we have to gear up to take advantage of this opportunity.
I think with a new cabinet, an improving investment environment, and harsh measures in administrative reforms, investment of the US and other countries into Vietnam will surely increase.
Source: VietnamNet
