The trend of shifting out of China has created pressure for FDI enterprises in the processing and manufacturing industry in Vietnam to expand production.
Mr. Vu Tu Thanh - Deputy Executive Director of the US-ASEAN Business Council said that many members of the Council are in need, even promoting the expansion of production in Vietnam.
Mr. Thanh gave an example, in the Northern region, a large company in the field of manufacturing electronic components with a factory in Thang Long Industrial Park invested in expanding production two years ago, increasing the export scale by four times, reaching about 200-240 million USD/year. " They are currently looking for a location to open another factory. Thang Long Industrial Park has run out of land, forcing businesses to find a new location with a demand of 7-10 hectares ," said a representative of the US-ASEAN Business Council.
Similarly, a business in the southern region that produces OEM for foreign customers in the electronics sector with an export scale of 2 billion USD/year, has a factory in the high-tech park of Ho Chi Minh City. " They said that customers increased pressure, forcing them to increase capacity ," Mr. Thanh added.
Or one of the world's largest toy manufacturers is also looking to increase production capacity in Vietnam by 10%.
According to Mr. Thanh, the reason why many FDI enterprises In the manufacturing sector, the reason why big brands in the world are looking to expand production is because they are putting pressure on increasing production capacity outside of China. " Why, they look at US politics and see that taxes on goods produced in China and exported to the US will increase a lot in the near future ," Mr. Thanh said.
From the need to increase production capacity of FDI enterprises in Vietnam, it can be seen that the trend of capital flow into Vietnam's manufacturing industry will increase rapidly. However, according to many experts, how can Vietnam attract high-quality FDI capital, while at the same time positioning resources for economic development?
Regarding this issue, from a business perspective, Mr. Thanh said that first, we must determine what to attract resources for in the next 5-10 years. If we look at the figures of foreign investment attraction in the past, we can see that over 70% of capital flows into the field. processing and manufacturing. “ Clearly this area is in dire need of resources and capital is pouring into it ,” Mr. Thanh commented.
To fully exploit the potential of the manufacturing sector in the economy, it is necessary to resolve related bottlenecks such as energy, human resources, infrastructure, and logistics.
Zooming in more specifically on the energy sector, a representative of the US-ASEAN Business Council reflected that to invest in a power plant with a capital scale of about 1 billion USD, investors require a government guarantee. However, granting a government guarantee is related to public debt. To solve this problem, investors have turned to a relatively creative financial tool, which is to use long-term power purchase contracts as a basis for bank loans... The government can consider providing similar documents to attract investors.
In fact, expanding production capacity and green transformation in production do not only exist in the FDI enterprise sector. Many domestic manufacturing enterprises want to transform to meet the regulations and sustainable development standards of import markets.
Garment Corporation 10 - JSC is an example. Mr. Than Duc Viet - General Director of Garment Corporation 10 said that energy conversion, specifically using rooftop solar power in production, is an important condition for businesses to meet green energy criteria.
“ After 2 years of research and consideration, May 10 chose a French investment fund to invest in. They installed equipment on the roof system of the company’s production factory for 20 years without May 10 losing any capital. The investor sells electricity to May 10 at a cheaper price ,” said Mr. Viet. At the same time, the investor will recover the capital after 10 years, the remaining 10 years will be profit.
" We hope that there will be similar investment funds in the country to support businesses so they don't have to search for foreign partners on their own ," Mr. Viet suggested.
On the other hand, green finance is an issue that businesses really need to meet the green transformation trend, but not only May 10, many other businesses have not been able to borrow this source of capital. " Why don't domestic banks and the Government build these funds? Obviously, this fund is not very risky, if the risk is big, foreign investment funds will definitely not invest ," Mr. Viet wondered.
Attracting high-quality FDI capital or capital in general for the development of the processing and manufacturing industry is necessary. Because this industry is still identified as the driving force of economic development. According to experts, to have high-quality capital, in addition to the participation of credit institutions and financial institutions, it is necessary to have a transparent and smooth investment and business environment with effective support from specific policy models.
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