VietNamNet Bridge – A number of the largest global technology groups have set up their factories in Vietnam, giving many reason to believe that Vietnam is destined to become the world’s major electronics production base.

The “Intel effect”

Intel is believed to have started the second foreign investment wave in Vietnam when it built a $1 billion chip manufacturing facility in Ho Chi Minh City in 2010. Outside of China, it is the manufacturer’s largest factory in the world.

Intel CEO Paul Otellinisaid at the time that the value of Intel’s project did not lie in its billion-dollar investment, but in its ability to lure other high-technology investors.

The Ministry of Planning and Investment (MPI) has announced that Samsung, which is now running two factories in Bac Ninh and Thai Nguyen Provinces, will funnel $1 billion to another project in Vietnam for the production of LCD panels and related accessories.

The recent moves by the South Korean electronics manufacturer have all suggested that Samsung has decided to develop Vietnam into its [primary] production base in Asia. Like Intel, the big investor would also help attract others to Vietnam.

Analysts are optimistic about Vietnam’s ability to attract foreign-invested high-technology projects.

The HCM City High-technology Park (SHTP) has reportedly attracted 30 hi-tech projects over the four years since it began operation. Investors in the park include such prominent names as Intel, Jabil, Nidec and Datalogic.

SHTP has granted 60 investment licenses to projects worth $2.3 billion in total so far this year, including 29 foreign-invested projects totaling $1.7 billion. The park’s management board is planning to enlarge the area by 70 hectares to accommodate more big investors in the high-technology sector.

Where’s the center of the production base?

Vietnam’s electronics export turnover soared by 35 percent in 2013 over the prior year, according to the Ministry of Industry and Trade. The figure highlights the increasingly large scale of electronics production in Vietnam.

After the Samsung’s factory in Thai Nguyen became operational, a number of satellite investors flocked to the province to set up their factories, making spare parts and accessories to provide to Samsung.

Hundreds of millions of dollars have been poured into electronics manufacturing projects in Thai Nguyen and Bac Ninh, turning the provinces into a new electronics center of Vietnam.

The British Laird technology firm, for example, has inaugurated a $4.7 million electronic parts factory in a land plot of 10,000 square meters in Bac Ninh province.

Samsung Electronics Vietnam (SEV) alone has 60 parts suppliers, including 45 from South Korea, five from Vietnam and 10 from other countries, while 28 suppliers have factories in Bac Ninh.

Foreign investors have also been seeking suitable sites in Bac Giang, Hung Yen, Vinh Phuc, Hanoi and HCM City to set up their factories. Hai Phong, the northern port city, proves to be an ideal location for many manufacturers.

There are two main reasons for high-technology groups to choose Vietnam for their production bases:a cheap and qualified labor force and attractive investment incentives.

Thai Nguyen provincial authorities, for example, in order to persuade Samsung to set up a factory there, have offered very attractive tax incentives for a period of 16 years.

DNSG