US investors still charmed by Vietnam

Vietnam ranks as a top location in South East Asia for US firms’ investment plans. This is according to Asean Business Outlook Survey 2012-2013 conducted by the US Chamber of Commerce and The American Chamber of Commerce in Singapore.
The survey found that 57 per cent of the total 356 respondents plan to expand business operations in Vietnam. Overall, 67 of the respondents to the survey conducted in June and July were already located in Vietnam.
For US firms working in Vietnam, 90 per cent of them expressed a positive or very positive outlook for the Asean region as an investment opportunity for their companies. And 75 per cent of these companies identify Vietnam as their target country for business expansion.
With 63 per cent of respondents, Singapore-based US’ firms had the largest representation in the survey. Thirty-six of the Singapore-based US firms surveyed said they would choose Vietnam as their target location for business expansion.
Moreover, 57 per cent of Vietnam-based respondents expect a higher profit in 2012 and 82 per cent of them predict their revenue in the market will go up in 2013. Although respondents in Vietnam who reported financing constraints doubled from 19 per cent in 2011 to 39 per cent in 2012, 52 per cent of them plan to increase their labour force from 5 to 15 per cent.
However, the American investors in the poll also note concerns about infrastructure, corruption, legal regulations and customs in Vietnam.
Vietnam and Thailand have the first and second largest number of respondents considering exporting to Myanmar, a country added to the survey for the first time. One-third of respondents said they are either already exporting or planning to export to Myanmar.
According to Mark Gillin, vice chairman of Amcham Vietnam, Vietnam-US bilateral trade achieved over $22 billion in 2011 and could be reach $44 billion in 2020.
"In addition to this strong growth of trade, an increase of about 17 per cent in 2011 over 2010 level, there are many indications that foreign investors, especially US companies, still evaluate opportunities in Vietnam positively. Existing foreign investors increased their investments in Vietnam by $3.1 billion in 2011, 1.7 times the 2010 level, indicating satisfaction with the investment environment in Vietnam,” said Gillin.
Moreover, US’ investment in higher value-added modern manufacturing is increasing, led by the Intel investment of $1 billion in an assembly and test facility in Saigon Hi-Tech Park, and scores of other smaller investments. AmCham Vietnam now has a "Manufacturing Committee” with about 20 companies involved in "modern manufacturing” in Vietnam.
These companies were successful and more were coming, said Gillin. Rick Howarth, general manager of Intel Products Vietnam, said that the Intel Vietnam project was making progress, and could eventually quadruple its current workforce of 1,000 employees.
"We expect to increase our capacity and hire more employees,” Howarth said. "This depends more on the market demand as well. Currently we have employed over 1,000 people and produces chipsets for laptops and mobile devices.”
"Once fully ramped, this factory may employ up to 4,000 people. Most of them are Vietnamese talents and production may include CPUs,” Howarth said.
"We’ve not encountered anything we didn’t expect. For example, we expected we’d need to work with the local government and education institutions to ensure that Vietnam has the right pipeline of industry-aligned talent. Intel has actively led and invested in higher engineering education alliance programme with the original funders from USAID and Intel. The government’s efforts on things like customs clearance, and improvement of infrastructure also have been appreciated,” he added.
However, Gillin added, there were concerns that Vietnam may become stuck in the "middle-income trap,” and may not succeed at the transition from low-skill, low value-added, low-wage manufacturing to higher-skill, higher value-added, higher income manufacturing and services.
According to Amcham Vietnam, a key issue of Ú firms’ concern is labour force and Vietnam should improve both labour law and productivity growth immediately.