High-tech multinationals invest in Vietnam

Many giant corporations like Intel of the US, Nidec of Japan and Robert Bosch of Germany are pouring more money into the high-tech field in Ho Chi Minh City.

Intel Vietnam , for example, has opened its plant, one of the largest in the Asia-Pacific region that makes and tests electronic chips.

The plant, which is located in the Sai Gon Hi-Tech Park (SHTP) in District 9, began operating its first production line for test purposes earlier this year.

Le Thi Thanh My, deputy head of the management board of the SHTP, said since July Intel had exported goods for more than 30 orders.

In addition, Germany Robert Bosch Vietnam next month will put into operation the Centre for Research and Production of Software, one of only two centres of the company in the Asia-Pacific region. The other centre, located in India , employs 70,000 engineers.

Vo Quang Hue, managing director of Robert Bosch Vietnam Company, said the company had also disbursed 24 million euros (US$31.2 million) out of the total committed capital of 55 million euros ($71.5 million) for a project to develop an assembly-line plant to make automatic automobile gear boxes.

The plant, in Dong Nai southern province's Long Thanh district, has a capacity of 2.3 million products per year.

Robert Bosch Vietnam will develop the second phase of the project and disburse the entire capital of 55 million euros by 2015.

Vietnam is the only market in Southeast Asia in which Robert Bosch has invested in all three areas of operation, including sales, production and research.

According to Lu Thanh Phong, deputy director of HCMC's Department of Planning and Investment, of the 3,000 foreign direct investment (FDI) projects with a total capital of $37 billion in the city, Japanese businesses account for 397 projects. They operate in mechanics, spare parts production, food processing and others.

Japan has been cautious in expanding its investment in the hi-tech field in HCM City due to limited capital resources.

However, many Japanese corporations that produce semi-conducting spare parts had increased their investment in HCM City recently, Phong said.

According to Nagamori Shigennobu, chairman of the Japan-based Nidec Corporation, Nidec will continue to invest in research and development at the SHTP.

Nidec has developed three projects and recently received a licence for another project. Total capital for the projects at the park is $500 million.

Nagamori Shigennobu has also committed to encouraging small and medium-sized Japanese businesses to invest in the park. Most of the businesses make spare parts for Nidec products.

With more high-tech projects in the pipeline, Vietnam has more opportunities to promote investment and enhance its competitiveness capacity in the field.

Hue said Vietnam has advantages over other countries in the region due to its low labour costs and good location for transporting products to other countries in Southeast Asia and other parts of the world.

Vietnam should create the most favourable conditions for foreign corporations so that they can produce and export hi-tech products here, Hue added.

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Piaggio targets Asia expansion for margin boost

MILAN - Italy's Piaggio SpA, best known for its Vespa scooters, plans to expand in Asia to take advantage of higher growth and margins than in mature European markets, it said on Thursday.

In a business plan, Piaggio, which produces motorbikes, scooters and light vehicles, set a target for its core earnings margin of 15 percent, up from 13.2 percent set for 2012 in its previous plan, and in line with expectations.

"The plan is focused on new industrial plants in India and in Vietnam, on strengthening the commercial presence in Asian markets via new products and on development of new technologies for European and American markets," it said.

Analysts were expecting a margin target in 2013 for earnings before interest, tax, depreciation and amortisation of between "over 14 percent" and "over 15 percent".

In the first half, Piaggio's EBITDA margin was 14.3 percent.

In India, Piaggio plans a new plant for scooter and motorbike models with the launch of Vespa models in 2012. In Vietnam, the existing plant will be expanded to satisfy demand on South East Asia markets.

In China, the plan targets further development of joint ventures operating on this market, it said.

Piaggio gave no details on investments but said net debt is targeted at 300 million euros in 2013. At the end of 2009, net debt was 352 million euros.

Piaggio shares were down 2.22 percent at 2.42 euros off a recent 20-week high. The STOXX Europe 600 auto index was up 0.6 percent.

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Chemical analysis labs need more domestic equipment

HCM CITY — Viet Nam should manufacture more machinery for chemical analytical laboratories as the market for such services is huge, experts have said.

Phung Minh Lai, deputy head of the National Agency for Science and Technology Information, said the annual growth rate of Viet Nam's chemical industry would be between 10 per cent and 15 per cent in the next few years.

As part of a chemical industry development plan, the government has set up production targets for the petrochemical and pharmaco-chemical industries by 2020.

The Ministry of Health estimates that the total value of drug consumption in Viet Nam this year could reach nearly US$1.5 billion.

The growth rate of the pharmaceutical industry has reached 15 per cent annually in recent years, but the scale of the industry still has been small.

The industry mostly produces typical pharmaceutical products with simple technology, according to Lai.

To reach the target, the Government will invest around 11 million euros (US$14 million) in the industry by 2015.

These include funds for many projects, including six phamarceutical production plants, some of which would make antibiotics and sorbitol products.

Moreover, pharmaceutical companies are looking for foreign partners to help them put biotechnology into actual practice.

For the petrochemical industry, Viet Nam has built three plants during the first phase, and the second phase will be implemented by 2015.

The government also will invest nearly 30 million euros ($38 million) in environmental-research projects, including water and sewage treatment as well as solid waste management.

Viet Nam has applied biotechnology in the agricultural and aquacultural sectors as well as the food processing industry.

Because water and food safety certification are two areas with high demand, where laboratories and modern equipment are necessary.

Currently, the State is investing in building 17 main laboratories, but Lai said this was insufficient.

Most of the equipment now in use was imported from Europe and Asia.

Nicole Klammer, head of the Analytica Viet Nam Project, said the country needed an outstanding platform for the analytical lab field.

Analytica Viet Nam on April 7-9 next year will hold a fair to display a variety of equipment that can be used in the country. — VNS

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German bank makes loans for rural power

HA NOI — Electricity of Viet Nam (EVN) and Germany's Reconstruction Credit Institute (KfW) initiated a 162 million euro (US$207 million) project to increase energy effectiveness in rural areas.

EVN's General Director Pham Le Thanh described the event as a turning point in Vietnamese and German relations, specifically regarding the electricity sector. "With the country's strong economic growth rate, electricity demand has annually increased from 13 to 15 per cent over the past years. Consequently, EVN mobilised $4-5 billion annually to invest in power projects," he said.

In an effort to improve low- and medium-pressure electricity grids, the project will target 26 provinces across Viet Nam until 2013. The project intends to minimise electricity losses, improve electricity supply quality and ensure power grid safety in rural areas.

EVN initially invested 120 million euros ($153 million) of preferential loans from the German Government and then invested an additional 42 million euros ($53 million). Prime Minister Nguyen Tan Dung approved the use of the development loans, marking the first time EVN borrowed money directly from KfW.The loan has a 4-year-term that will end in June 2014 and the debt is to be settled within nine years. — VNS

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