Many foreign direct investment (FDI) enterprises have accelerated investments and are now outperforming domestic firms in many major Vietnamese export sectors.
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| A worker assembles refrigerators at Taiwan invested Tatung Vietnam |
South Korea's Nobland Vietnam Co has decided to increase its capital by $17 million and expand its garment production lines by an additional area of 11,000 sq.m in HCM City's Tan Thoi Hiep Industrial Zone.
Lee Ho Young, a company official, said the more advantageous investment environment in Vietnam compared to neighbouring countries prompted the expansion.
China's textile company Texhong in the southern Dong Nai Province has boosted its production capacity from 30,000 tonnes to 150,000 tonnes of products per year, aided a capital increase from $80 million to $150 million.
Taiwan's textile producer Formosa also supplemented its investment capital with $30 million late last month.
Vietnam Textile and Apparel Association vice chairwoman Dang Thi Phuong Dung said FDI enterprises represented about 60 percent of the country's total garment and textile product export value, which was worth over $12 billion in the first ten months of the year.
Nguyen Tan Phuoc, deputy head of the HCM City Export Processing and Industrial Zones Authority, said FDI firms here are expanding production, with many involved in footwear, garment, and electronic products widening investments into other provinces.
Vietnam Steel Association vice chairman Nguyen Tien Nghi said South Korea's Posco Group now represents about half of the domestic rolled steel market, causing significant difficulties for local manufacturers, including the Vietnam Steel Corporation and the Thong Nhat Flat Steel Joint Stock Co.
"Modern production technology, optimal materials and fuel saving methods help keep the prices of FDI firms' products much more competitive than those of domestic steel makers," he said. "They are likely to gain greater market shares in the coming time."
Vice chairman of the Vietnam Leather and Footwear Association, Diep Thanh Kiet, said that in recent years, FDI footwear producers achieved an annual growth of 16-18 percent, while domestic firms only managed 10-12 percent.
Foreign firms also represent up to 70 percent of the quantity of well-known clothing and footwear products exported worldwide.
"With their strategic visions, outstanding financial capacity and flexibility in regulating business areas with global operations, it's natural that FDI enterprises account for great ratios in export balances," he said.
He noted that FDI companies know how to take full advantage of national-level trade agreements, especially benefits related to export taxes, in developing their businesses. Kiet said domestic enterprises obviously saw opportunities on the horizon, but low financial capacity and labour productivity, as well as high interest rates still cause them to lag behind.
Ministry of Industry and Trade official Phan Thi Dieu Ha said the Government should help local businesses by offering more preferential policies related to loans and interest rates.
According to National Assembly reports, while FDI enterprises' export turnover reached $58.5 billion in the first ten months, rising 32.2 percent year-on-year and accounting for 62.6 percent of the nation's total export turnover, export turnover from the domestic sector only posted a modest increase of 1 percent.
