Viet Nam to solidify big-name FDI projects

The Glonics Viet Nam Ltd Company's headphone production line supplies Samsung. Viet Nam expects to lure more projects worth billions of US dollars, like those from Samsung. VNA/VNS Photo Hoang Nguyen

After separating its LCD and OLED businesses, Samsung Display is considering moving its LCD module (LCM) plant in South Korea to China or Viet Nam as labour expenses in South Korea have been rising dramatically, according to the Korean-language AJU Business Daily report.

Since the assembly of LCD modules requires manual labour, Samsung Display wants to move production lines out of South of Korea to save costs. The manufacturing of the cell, which is highly automated, will stay in the country.

Local experts said that it was likely that Samsung Display would choose Viet Nam to save costs in comparison with China.

Samsung Display opened its US$1 million plant in March in the northern province of Bac Ninh to produce a high-resolution display to supply Samsung smartphone manufacturers in Viet Nam and around the world.

Recently, the Bac Ninh Province's People's Committee asked the Bac Ninh Industrial Park to negotiate and sign agreements with Samsung Display to develop a project to expand production of Samsung in Viet Nam.

If the plan is successful, there will be billions of US dollars poured into Viet Nam.

In addition, Prime Minister Nguyen Tan Dung has decided to also give priority to the Victory-Nhon Hoi petrochemical and oil refinery project, valued at $22 billion.

The project, located in Binh Dinh Province's Nhon Hoi Economic Zone, is to be funded by the Petroleum Authority of Thailand (PTT) and its strategic partner, the Saudi Arabian oil company Saudi Aramco.

The chairman of the Provincial People's Committee, Ho Quoc Dung, speaking to a meeting held last week with local authorities and ministry leaders, said he would work with PTT's representatives to complete the investment license, scheduled to be issued in the second quarter of this year.

The Ministry of Industry and Trade is also expected to sign a build-operate-transfer (BOT) contract and complete investment registration procedures for the 2,640MW Van Phong Thermal Power Plant 1 in the third quarter of this year.

When the investment certificate is issued, at least $2 billion worth of FDI would be poured into Viet Nam.

In addition, a $5billion complex will be built by a South Korean firm on land near the Ba Son Shipyard. South Korea's EUNSAN & OUE Group is expected to begin construction of the project on National Day (2 September).

This is one of the key projects that would help develop the city in line with an adopted master plan. But as the location is special in terms of national defense, the Government and the Ministry of Defense will decide on further procedures before the project is executed.

There are also many other projects worth billions of US dollars, especially power projects under the BOT model, experts have said.

Dang Xuan Quang, deputy head of the Foreign Investment Department under the Ministry of Planning and Investment, said there was a drop in FDI investment in the first four months because many of the big projects have not been issued investment certificates.

"Some large projects worth billions of US dollars are now under negotiation," he said.

In a related issue, disbursement of existing FDI recorded a year-on-year rise of 5 per cent to hit $4.2 billion in the first four months of this year, according to the Foreign Investment Department. Tran Tuan Anh, deputy minister of Industry and Trade, said within the first four months, disbursement of two projects of Formosa and Samsung, to import machinery for production, reached more than $1 billion. Also on May 19, work will start on a Samsung project in HCM City with investment of $1.4 billion. It is estimated that the disbursement of FDI would continue to rise in the coming time.

Although FDI and the disbursement of FDI are showing positive signs, experts are concerned how to fully take advantage of FDI investment for socio-economic development.

Tran Dinh Thien, director of the Viet Nam Institute of Economics, has raised concerns about what would happen when FDI businesses no longer find Viet Nam an advantage for their investment.

FDI is a main resource and driver of the country's economic growth.