Itinerary:
1. Vietnam Chamber of Commerce & Industry
2. AP Petrochemical (Vietnam)
Vietnam Chamber of Commerce & Industry (VCCI)
Workshop on Economic & Trade Trends in Vietnam
While waiting for the speaker to arrive, the VCCI director, Mr Minh Bang Zhong, gave a short speech. The VCCI is like the Department of Planning & Investment of HCMC. He mentioned that there are several business opportunities available in Vietnam, in the area of urban development, infrastructure, technological, services and industrial.
Speaker: Mr Pang Ken Jung
GM of CT&D Group
Mr Pang was versed in Chinese thus he gave the talk in Chinese. Unfortunately, many of us did not have a good understanding of the language, including me. I can converse in basic Chinese but the problem was that many trade terms were used during his speech, which I had problem translating into English at the rate he was speaking.
Besides being a GM, Mr Pang also gives lectures on "How to attract investment in Vietnam" and he used to be a Physics teacher. He started off with an introduction of Vietnam's economic past.
In short:
- 1975 to 1980: Closed economy
- 1980 to 1986: Emerged from the centralised economy towards an open economy. Opened up to barter trade (Liberalisation)
- 1986: Formally open to all private companies to trade (Free trade)
- 1986 to 2007: 21 years to achieve rapid development today
- 1991: Started to attract foreign investment from the ASEAN region (Taiwan, Hong Kong, Singapore, Korea, Japan)
- FDI now about USD1 billion a year
Challenges facing Vietnam
- Gradual change from a centralised to a free economy. Laws are not complete
- Small-scale production thus quality differs due to lack of mass production and quality control
Business Opportunities:
Hence, there are plenty of opportunities for foreign investors - invest in large-scale production. The trick is to invest big and manufacture yourself so as to achieve economies of scale and quality control. The nation is unable to carry out such ventures as there are no huge warehouses to store the goods in Vietnam. Again, this presents another opportunity for investors as they can exploit the chance to build storage warehouses.
Vietnam has plenty of potential for business and many Singaporeans have seized the opportunities. For example, VSIP's location used to be barren land but it is now very prosperous, earning high returns. Mr Pang pointed out that, as long as an investor has the foresight and capital, opportunities are waiting to discovered.
Before entering the WTO, the Vietnam market was very small with trading partners limited to Singapore, Hong Kong, and Japan. After joining the WTO, Vietnam now exports to the USA (world's biggest market). As a result, rural production is on the rise.
In the past, not many people lived in the outskirts of HCMC. Ever since Vietnam opened up to foreign investors in 1986, these investors have started to invest in the outskirts of HCMC. So far, 10 industrial parks have been developed. Over a span of 20 years, about 40+ industrial parks have been built in Southern Vietnam with each park containing 100 to 200 companies. This has boosted Vietnam's economy and raised the GDP from USD150/year/person in 1986 to USD700+/year/person now.
The HCMC port is currently located at the junction of 2 rivers thus the maximum shipload is limited to 30,000 tons (Singapore 300,000 tons). Thus, the port will be shifted nearer to the sea to allow 50,000 to 200,000 tons, so as to accomodate large ships.
Why Vietnam?
Central location of HCMC in the region. All major ports and airports are within similar reach from HCMC. Vietnam is the gateway between China and the ASEAN countries.
Human resources and fast-growing market. Skilled, motivated and cost-effective workforce. 84 million population with about 50% below the age of 25. High literacy rate of 92%. Each year there are more than 30,000 graduates from HCMC universities. English proficiency on sharp increase.
Abundance of natural resources. Agriculture remains important. Mining, oil and gas sectors are on the rise as other large export earning sectors. Gas power supply for the country's growing demand and industrial development. Vietnam is world's #2 rice producer, coffee exporter and #2 seafood exporter to the US.
Positive foreign investment environment. Most politically stable country in the region. Government supports investments with pressure for reforms. GDP growth nearing 7% and is set to increase. Main events for growth include, Doi Moi 1986, Normalisation of relations with the USA (1994), BTA with USA (2001), WTO entry (2007).
The new city centre at Saigon South, a project by CT&D group, used to be barren land as well. There was no infrastructure, infertile soil, floods during high tide, but the plus point was the short distance from HCMC. Sand was used to fill up the lowland, thereafter, the price of the land (now Phu My Hung) shot up by 500 times over 20 years. This is due to the development of the road network, roads increase accessibility to areas. Thus, wherever new roads link to, the price of the land will rise.
Business Opportunities:
The power sector used to be state-owned but has since opened up to investors due to the lack of power. For example, Hiep Phuoc Power Plant (100% FDI) is one of the 1st foreign invested power plants and supplies half of the nation's power.
The government is very supportive of investments and is open to implementing reforms to attract investment. Hence, if you have a good investment idea but the Vietnamese government does not permit it at present, you can arrange to see the government. For big investments, the government may allow and even alter laws a little to facilitate your investment. For example, the Taiwanese requested to see the government and the laws were changed for them to build housing (Phu My Hung). From this, it can be said that the government welcomes investment and is taking steps to create a favorable business environment.
AP Petrochemical (Vietnam)
We had to take a ferry to get to AP Petrochemical
On the ferry.
AP Petrochemical is located in Dong Ai Province. Before we embark, we had to switch off our handphones as it is a hazardous zone.
We also had to wear helmets while touring the petroleum. They were rather strict with the attire as all of us had to wear long sleeves, jeans and covered shoes. I thought this reflected well on the company as they were enforcing safety.
Speaker: Mr Jason Tan (Singaporean)
GM of AP Petrochemical (Vietnam)
VOPAK is a Dutch company and is the parent company of AP Petroleum (100% ownership). Customers are industrial and not households. Mr Tan gave us a presentation on VOPAK and its operations. VOPAK is actually a global leading tank terminal company and mainly deals in logistics (focus on oil and chemical industries). It has 74 terminals in 30 countries with a 3,400 strong workforce.
Business Opportunities:
This is a fairly new industry in Vietnam and AP Petrochemical is the only independent 3rd party storage there. Investors should exploit the first-mover advantages as joining the industry early tends to give rise to a higher chance of success.
Besides, Mr Jason Tan mentioned that he is barely able to access his email on-site due to the low internet coverage. When researching for the report, I learnt that the Vietnamese government is looking to 'equitize' (Vietnam's term for 'privatize') formerly state-owned sectors such as telecommunications and power to encourage healthy competition in the market which ultimately benefits end users as they get to choose from a variety of providers and prices. This offers an attractive opportunity for investors to partake in Vietnam's infrastructure development.
No comments:
Post a Comment