According to the Vietnam Electronics Association, Vietnam became a suitable investment location for electronics projects after joining the WTO.

 

 

One official from the association said that $3bil worth of electronics projects have been inked so far.

 

Right after Vietnam was admitted to the WTO, US-based Intel group raised its investment capital in Vietnam from $600mil to $1bil. After that, Japanese Nidec decided to set up a workshop in the southern province of Binh Duong, capitalized at $1bil. Taiwanese Foxconn has invested a total of $5bil, including the $1bil project to produce electronics accessories. Japan’s Meikom invested $3bil in an electronics project in Ha Tay Province in the north.

 

The Ministry of Planning and Investment has said that it is considering licensing South Korean Samsung’s project, planned for Yen Phong Industrial Zone in Bac Ninh Province. The project, capitalized at $650mil, will make electronics accessories.

 

It is clear that Vietnam has become an electronics destination for global companies. More and more electronics producers are flocking to Vietnam from Taiwan, Japan and South Korea, and more projects are expected to be licensed in the time to come.

 

According to Tran Quang Hung, Secretary General of the Vietnam Electronics Association, foreign investors are now relocating their electronics workshops to Vietnam instead of China or other South East Asian countries. Meikom, for example, is considering moving its production facility from China to Vietnam.

 

The two most important factors attributed to foreign investors attraction to Vietnam: 1. Vietnam has a big land fund with a lot of property suitable for electronics production, and 2. Labor is cheap. As Vietnam works toward encouraging the development of high-tech industries, it offers big incentives to investors in the electronics sector. Meanwhile, in China and Malaysia, the land leasing fee is increasing.

 

Most electronics projects in Vietnam, so far, produce electronics accessories, meaning that Vietnam will see a boom in electronics supporting industries in the time to come. By using the Vietnamese workforce, the projects will also help more and more Vietnamese become skilled workers.

 

However, foreign investors only use Vietnamese land and laborers, but do not use local materials. In 2007, Vietnam’s electronics exports brought $2.2bil in turnover, but the added value of the projects just accounted for 5-10%.

 

Mr. Hung says Vietnam welcomes all electronics production projects. However, it is not enough to only make electronics accessories. To have a powerful electronics industry, Vietnam also needs good designers, a current shortcoming.

 

According to the Vietnam Electronics Association, foreign invested electronics investors do not pay attention to training Vietnamese electronics designers. They only focus on training workers for production lines and technical workers for product maintenance. Meanwhile, Vietnam’s universities are also not training designers for the electronics industry.

 

“If Vietnam does develop and educate designers, it will never be able to make products of its own,” said Mr. Hung.

 

Tran Thuy

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