Vietnam: An Investment Opportunity

Reported in The Business Time (28/08/06), Vietnam’s ambassador to Malaysia, Nguyen Quoc Dung and former bank governor Cao Si Kiem and others recently gave a talk in KL pertaining to the viability of Vietnam to the potential Malaysian investors.

Append below some noteworthy facts that might be of  interest to some of the Malaysian investors:

• Though Vietnam is still one of Asia’s poorest countries, its economy is on the roll;
• Gross domestic product has been growing at an average of 7.5 per cent for the last five years, hitting 8.4 per cent last year;
• Vietnam expects to grow its economy by 8 per cent this year up until 2010. To do that, it needs to attract foreign investments worth some US$23 billion-US$24 billion;
• Last year, its industrial sector contributed 41 per cent to Vietnam’s economy. The country intends to beef it up to 44 per cent by 2010;
• It has a population of about 83 million with more than half of the Vietnamese below 25 years old and more than 80 per cent are below 40;
• Labor is cheap which is one of the major reason foreign companies like giant shoe maker Nike and semiconductor maker Intel have either set up shop or announced plans to do so;
• An average cost of income per head in the country is US$440 while in Malaysia, it is US$4,130;
• Investments from Malaysia reached US$1.6 billion from 1988 until June 2006;
• Malaysians are involved in 190 projects, comprising sectors like construction, oil and gas, banking and tourism.
• Some prominent Malaysian investors who have invested in Vietnam includes Petronas which has a joint venture with PetroVietnam in oil exploration ever since it stepped into the country in 1991; IGB Corp Bhd, which had built the New World Hotel in Ho Chi Minh City, the Lion Group’s Parkson retail chain, the Faber group’s Sheraton Hanoi Vietnam Hotel and APL Industries Bhd’s rubber glove manufacturing factory.

Some interesting incentives offered include:

• Tax breaks if the Malaysian investors were to set up or support facilities in Vietnam’s 131 export-processing zones, 60,000ha of industrial parks and eight economic zones.

• Under the investment encouragement policy, investors may get preferential corporate income tax of 10-20 per cent, an exemption or reduction of corporate income tax, or a reduction in export taxes, depending on certain conditions.

Well, seems like a nice place to jump in but the bureaucracy, corruptions, etc might pose some major hindrances to the unwary. To the bolder investors-no venture no gain!