Cooperation between Vietnam Japan After the Covid Epidemic

 On May 15, 2020, the Minister of Planning and Investment met Ambassador Mr. Yamada Takio (Japan) on the occasion of starting his working term in Vietnam. The parties spent time welcoming and sharing a number of problems that need to be resolved to promote investment activities between the two countries in the context of the Covid-19 epidemic, including promoting public investment, promoting investment in the private sector, attracting investors to set up company, factory and implement investment into export processing zones in Vietnam.

The Ambassador said there are currently more than a thousand Japanese experts who wish to have work permit, investment visa, temporary residece card to go to Vietnam to restore business production. In addition, Japanese small and medium enterprises are very interested in the Vietnam market. Japan Government has provided 23.5 billion yen (USD 220 million) to encourage domestic enterprises to transfer production activities to Southeast Asian countries, including Vietnam, which is an opportunity for Vietnam to attract FDI to register investment project in setting up factory in Vietnam.

Following the the investment shift after the US-China Trade war (2019) and the Covid-19 epidemic, many Japanese investors intend to withdraw from China to invest in Vietnam to set up factory, and company and form a new supply chain. Accordingly, Vietnam will have a plan to create a working group to attract Japanese enterprises to invest in the fields and provinces that Vietnam wishes to contribute more to the socio-economic development of Vietnam. In 2019, Japan is the fourth-largest FDI country in Vietnam, the second largest investment partner in Vietnam implementing the project, with a total investment of USD 59.3 billion.

With its advantages and experience, Japanese investors are investing in Vietnam in the fields of professional science, technology, information technology, wholesale, retail, engineering and real estate. These industries are the advantages of Japanese investors when investing in Vietnam, which it not only brings benefits to investors but also helps Vietnam to learn management experience and operation from Japan, helping Vietnam to apply to develop the domestic economy.

The Vietnamese representative emphasized the importance to attract Japanese enterprises to invest smoothly and successfully in Vietnam, including large and small and medium-sized enterprises to contribute more to the socio-economic development of Vietnam. At the same time, the Ministry of Planning and Investment continued to work closely with the Embassy as well as with the Ambassador’s individual to bring closer cooperation between the two countries.

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Vietnam is Increasingly Attracting Capital from the US

 Vietnam is taking every opportunity to grow its economy and improve the living standard. This is not a vain dream since Vietnam has young and plentiful work force. That is why multinational companies wish to come and set up company in Vietnam.

The year 2015 marked the 40 years since the war end and the 20 years of normalized the relationship between Vietnam and the US. Vietnam began the process of innovation since 1986 but not until 1995, foreign investment in Vietnam began to flow in when the Government established formal diplomatic relations with the United States and joined the National Association of the South East Asia (ASEAN).

In recent years, foreign investment in Vietnam has accelerated. The Korean company is particularly excited with this market. Samsung Electronics is operating and building three plants at three locations – Ho Chi Minh City, Thai Nguyen and Bac Ninh. In total, this giant electronic corporation has poured more than USD 10 billion in Vietnam.

Vietnam is also expected soon to welcome a “wave” of investment from the US. The Procter & Gamble (P&G) – a consumer goods manufacturer is building a factory in Binh Duong with the cost of 100 million USD. The plant will produce Gillette razors.

Since starting operations in Vietnam in 2008, Intel is also pouring money into this market. This semiconductor giant is planning to manufacture in Vietnam the most of advanced processor for personal computers in the future.

Moreover, other big names come from the US that are expanding operations in Vietnam are Starbucks and McDonald’s. They opened their first store here in December 2013 and February 2014.

There are a number of factors that make foreign investment in Vietnam explode. One of the most important reasons is the low labor cost. Labor cost hikes in China are the reason why many multinational manufacturers turned their attention to Vietnam where the cost is 50% cheaper. Besides, the purchasing power of Vietnam consumer is increasing, inflation has been curbed and many easing regulations to boost growth are also the reason why continuous investments are poured tin..

However, the biggest attraction for most foreign investors is the Trans-Pacific Partnership agreement (TPP) about free trade in which Vietnam is one of 12 countries that participate in negotiations. In mid of this year, General Secretary of Vietnam, Mr. Nguyen Phu Trong will visit the United States. TPP agreement will be the main topic of the conversation with the US officials. If the two countries can reach an agreement, the US will become even more important partner of Vietnam’s economy in the future.

In a press conference in HCM city in January 2015, US Ambassador in Vietnam – Mr. Ted Osius was upbeat about the impact of the TPP to Vietnam economy and the US investment here. TPP agreement “will allow the US to become the number one investor and trading partner of Vietnam” he said.

In about 4.5 million Vietnamese living overseas, about 2 million are living in the US. In particular, many people have made a name in the business world. They are Mr. Henry Nguyen – who brought McDonald’s to Vietnam and Mr. David Thai – founder of Highlands coffee chain.

According to the Ministry of Foreign Affairs of Vietnam, approximately 180,000 companies in the United States are owned by Vietnamese, achieved a total revenue of 20 billion USD. Strengthening ties between the two countries could stimulate greater cash flow stream across the Pacific.

The Ministry of Planning and Investment of Vietnam is estimated to spend 500 billion USD in over 10 years to develop the infrastructure necessary for sustainable growth. However, Vietnam can only able to meet 40% of the above figure, through the Government budget, ODA and private capitals.

That is why the Government wants to attract FDI. The Vietnam Government has set a target to create an industrial economy by 2020. Six priority areas are agriculture, forestry and fisheries processing, agricultural machinery, electronics, shipbuilding, environmental and energy saving, automobile production.

The transition from growth based on FDI into industrial-based growth can be rather difficult. However, Vietnam has shown it is serious and is still on track.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

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Which Sectors Attracting Investment in First Half of 2015?

 The trend of foreign direct investment (FDI) in Vietnam continues to tremendously increase into key sectors such as industrial processing and manufacturing, business and real estate, wholesale and retail, through setting up business in Vietnam.

Accordingly, the disbursed FDI inflows in June positively increased and exceeded the growth rate of last year. In June 2015, registered and new FDI is 1.19 billion dollars, bringing the total registered and new value to 5.49 billion dollars since the beginning of this year, equivalent to 80.2 % value of the same period in last year 2014.

In particular, FDI registered capital of 3.83 billion USD since the beginning of 2015 is equivalent to 79% FDI capital of the same period in 2014. Additional FDI capital was 1.65 billion in the first 6 months of 2015, equivalent to 83% FDI capital of the same period of 2014. The FDI project has disbursed a total of 6.3 billion, increase 9,6% value in the same period in 2014.

FDI in small-scale projects has a tendency to continue to play a leading role as the previous month. In June 2015, Vietnam has not had any large-scale projects yet. Meanwhile, small-scale projects including new and additional capital have increased. The number of new projects increased by 15% and the number of additional capital projects increased more than 28%.

Foreign investment in Vietnam in the past 6 months continuously focuses on key industries like processing industries, manufacturing, business and real estate, wholesale and retail.

Previous figures of Foreign Investment Agency (Ministry of Planning and Investment) stated that processing industries, manufacturing continues are the sector attracting the interest of foreign investors with 338 registered investment projects and 190 new projects increased capital, with total new and additional capital is 4.18 billion, which accounts for 76.2% of total registered capital. Real estate is second with 11 projects registered and 7 projects increased capital. The total investment of newly registered and additional capital is 465.5 million USD, accounting for 8.5% value of total capital investment. At third, the wholesale and retail sector with 119 new projects and 26 projects increased capital. The total investment of newly registered and additional capital is 276.5 million USD, accounting for 5% value of the total investment.

Compared with the same period of 2014 figures, it’s clearly that foreign capital invested in the retail sector is growing. In the first 6 months of 2014, FDI in retail sector figures stop at about 1.4% of total registered FDI capital in Vietnam. In the first 6 months of 2015, this figure has increased by 5%.

In conclusion, thanks to the considerably development in recent years, the retail industry has risen and competed against the construction industry, becoming one of three areas which attracts foreign capital the first six months of the year 2015.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

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Strong Flows of FDI Into Vietnam in Jul 2015

 It has been reported foreign direct investment is strong in the month of Jul 2015 for which foreign investors have been putting more money into manufacturing through setting up business in Vietnam especially high tech area.

There were a series of FDI projects that are newly granted with the investment certificate in July 2015, such as the 274 million USD project of Far Eastern in Binh Duong; or the project of Regina Miracle Company will invest 88 million USD to build a shoes manufacturing plant in an area of ​​13.6 hectares in the VSIP Hai Duong. Moreover, VSIP has just received the investment certificate of the industrial park – urban area – services VSIP Nghe An project with the first phase investment capital of over 15 million USD, the entire project could be 76 million USD.

This trend will probably continue in the future, and not just relying on those large-scale projects mentioned above. In the mid-July, during the visit to the United States, leaders of Ho Chi Minh City (HCMC) have signed a written approval for the Jabil Group (US) to invest additional amount of 500 million USD to expand their factory in HCMC hi-tech park.

Jabil has invested in Vietnam since 2007 and recently they are continuously expanding their investment. According to the statistics of HCMC, Jabil’s revenue in HCMC have steadily increased by 50% / year over the last 5 years and accumulated until the end of June 2015, Jabil has exported 1.3 billion USD of the high-tech products, making great contributions to the socio – economic development of the city.

If this project soon to be granted the investment certificate, it will contribute not only to newly registered FDI capital, but more importantly, emphasis the intention to encourage investment in high-tech sectors was a right choice.

Not only in the field of high technology, in order to meet the opportunities brought up by the Trans-Pacific Partnership (TPP), many large FDI projects will flow into Vietnam in the coming time. The negotiations in an effort to resolve outstanding issues when joining TPP will be conducted this coming months. If completed, the TPP will bring many opportunities (and of course the challenges) for Vietnam.

Meanwhile, there are more and more foreign business delegations coming to seek investment opportunities through setting up factories in Vietnam. Last week, a South Korean business delegation came to Vietnam to survey the market and seek investment opportunities in the field of electronics industry in Vietnam.

South Korea is currently the largest investor in Vietnam, with total registered capital of over 39 billion USD and this figure will continue to rise sharply in the future. According to Mr. Kim Young Sun, general secretary of the ASEAN – Korea Center, Vietnam is an attractive investment destination for many Korean businesses, especially businesses in the electronics field.

In particular, with the Vietnam – Korea free trade agreement has just been signed, the expected two-way trade turnover will reach 70 billion USD by 2020. This will open up further extensive cooperation opportunities between Vietnam and Korea in various fields, including investment in Vietnam.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

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Set-up Partnership in Vietnam

 A partnership is an enterprise which must be at least two members being co-owners of the company jointly conducting business under one common name. In addition to unlimited liability partners, there may be limited liability partners.

Unlimited liability partners must be individuals who shall be liable for the obligations of the company to the extent of all of their assets. Limited liability partners shall only be liable for the debts of the company to the extent of the amount of capital they have contributed to the company.

ANT Consulting is here to assist you from the outset; providing intelligence, information, management or support and administrative services that assist market entrance, and ensure efficient business start-up operation. Our services are as following:

Market Entry

Tax Advice

Legal Advice

Outsourcing Services

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows. We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

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Hanwha Techwin Company (Korea) Wants to Invest in Bac Ninh

 Vietnam has always been an ideal investment destination for many foreign companies to come and set up business in Vietnam.

Currently, Mr. Yang Jin Seol, CEO of Hanwha Techwin Company (Korea) came to Bac Ninh to survey and explore the investment environment in Bac Ninh province.

Working with the Chairman of Bac Ninh Province, Mr. Yang Jin Seol said that Hanwha Techwin Company (under Hanwha Group) is specializing in producing security devices with 27 networks globally. Turnover of the Company in 2015 reached nearly 600 million USD.

Through survey and research, the Company is expected to invest in building factories in Que Vo Industrial Zone with a total investment of 50 million USD, in which the first phase (2017-2019) is 30 million USD. When put into operation, the plant will create jobs for about 1,500 – 2,000 labor, with capacity of 2 million pieces/year.

Mr. Yang Jin Seol hopes that the company’s business ideas will be interested and the provincial leaders will create favorable conditions, especially the preferential policies for enterprises producing high-tech products so that the Company can early implemented the plant construction in the first quarter of 2017.

The Chairman of Bac Ninh province welcomes Hanwha Techwin Company have trusted and choose Bac Ninh as investment destination to invest in stable and long-term production. He also assigned the Management Board of Industrial Zones in coordination with the Kinh Bac Urban Development Corporation – the infrastructure investor of Que Vo Industrial Park and other offices complete the legal procedures and creating all necessary conditions for the project of Hanwha Techwin Company.

Bac Ninh is one of the leading provinces in attracting FDI with nearly 1,000 projects with total registered capital of over 12.26 billion USD. South Korea has more than 400 projects, accounting for about 50% of total FDI capital of the whole province, in which there are many projects of large companies such as Samsung, Orion, Daewoo, Flexcom, Intops, Nano Tech…

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