APEC both symbol and crux of FTA era

As the 2017 APEC Economic Leaders’ Week arrives, Vietnam’s various business potentials will be brought to the fore, Photo: Le Toan

Thai Huong, chairwoman of locally-owned TH Group, is busy making preparations for her participation at the Vietnam Business Summit and APEC CEO Summit as part the 2017 APEC Economic Leaders’ Week, organised in the central city of Danang from November 6-11.

At these meetings, Huong expects to meet with many partners to seek co-operation opportunities. “At the meetings, I will also talk about our group’s sustainable development and about food security,” Huong told VIR. “I also hope to meet with leaders of several APEC economies to talk about our projects.”

Since 2008, TH Group has been operating a $1.2 billion high-tech concentrated dairy and fresh milk production project in the central province of Nghe An’s Nghia Dan district.

Currently TH is also implementing a similar project worth $2.7 billion in Russia. This three-stage project is Vietnam’s biggest agri-food project overseas so far. In addition to producing milk, it will also churn out high-quality vegetables and fruit.

Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said that not only TH Group, but many other Vietnamese enterprises such as Vinamilk, Viettel, Vietnam Airlines, Minh Long, VNPT, Habeco, Vinatex, Vingroup, and Sun Group will have opportunities to meet with partners from the 20 other APEC member economies.

Meeting of investment and business opportunities

Bui Thanh Son, permanent Deputy Minister of Foreign Affairs and APEC 2017 SOM Chairman, said more than 2,000 Vietnamese and foreign firms will meet with one another at the 2017 APEC Economic Leaders’ Week, which has an overarching theme of “Creating New Dynamism, Fostering a Shared Future”.

“Numerous big investment and business deals are expected to be inked during this event,” Son said at last week’s press briefing on the APEC main event.

The event is expected to welcome over 10,000 delegates, including government officials, enterprises’ CEOs, experts, and journalists.

“Prime Minister Nguyen Xuan Phuc will attend the Vietnam Business Summit, highlighting Vietnam’s attractive investment climate and calling for investments into Vietnam,” Son said. “President Tran Dai Quang will attend the APEC CEO Summit as well, also calling for more investment.”

Nguyen Viet Ha, managing director of US-backed investment consultant BowerGroupAsia Inc.’s office in Hanoi, told VIR that APEC is a “rare opportunity” for Vietnam to showcase its potential and beauty in order to lure more foreign direct investment (FDI). Investors and firms from not only APEC economies, but also from many other parts of the world, are expected to come to the event.

For example, leaders of Anheuser-Busch InBev, one the world’s largest brewers, are likely to attend the APEC CEO Summit. Last week, this group’s CEO Carlos Alves de Brito met with PM Phuc in Hanoi, saying that AB InBev is willing to buy all stake in Vietnam’s two largest breweries, Sabeco and Habeco, which are also being eyed by several other foreign firms.

AB InBev’s representatives have met with relevant ministries to discuss the plan, and will continue to have meetings with them soon.

AB InBev is expected to expand its investment in Vietnam, adding to its two existing production plants in the southern province of Binh Duong.

Mark Konyn, group chief investment officer of global insurance firm AIA Group, will attend the APEC CEO Summit, in order to meet with partners and especially the Vietnamese PM.

Many other firms from the US such as ExxonMobil, Coca-Cola, Nike, Boeing, ASG, McKinsey, General Electrics, Murphy Oil, Hilton, and Harbinger Fund will also come to Danang to attend the summit. These firms are eyeing Vietnam as an attractive investment location, with many opportunities. The opportunities include a developing middle class, a young population, a skilled labour force, competitive labour costs, high GDP growth, and an attractive market with global competitiveness.

“The world’s leading CEOs come to Vietnam as they are seeing many attractive investment and business opportunities here. The CEOs also want to directly witness Vietnam’s ongoing reforms, which are paving the way for their investment inflows into the country,” said VCCI’s Loc. He called APEC 2017 “another golden opportunity for Vietnam to continue attracting investment from APEC members”.

In 2006, when Vietnam hosted APEC for the first time, many dozens of co-operation agreements and contracts worth billions of dollars were inked between Vietnam and APEC members. For instance, Vietnam inked 10 co-operation deals worth over $3 billion with China alone. APEC 2006 also brought golden opportunities to Vietnam in terms of investment attraction. At the Trade and Investment Promotion Forum, eight contracts and co-operation projects worth nearly $2 billion were signed between Vietnamese firms and foreign partners.

According to Vietnam’s Ministry of Planning and Investment, as of October 20, firms from 18 APEC economies invested in over 20,300 projects in Vietnam, registered at over $247 billion – making up nearly 78.9 per cent of the country’s total registered FDI of nearly $313 billion.

Support for local firms

According to Loc, micro, small-, and medium-sized enterprises (MSMEs) are playing a big role in driving the growth of many APEC member economies, including Vietnam’s. Statistics from the Vietnamese Association for Small- and Medium-sized Enterprises show that currently, MSMEs account for over 97 per cent of Vietnam’s total enterprise number of about 600,000. They use 51 per cent of the country’s total labourers, create 40 per cent of GDP, and contribute 30 per cent to state coffers.

“However, the awareness of many local MSMEs about APEC remains limited, the same as their links to the global supply chain,” Loc said. “It is likely that they know about APEC opportunities, but they can’t grab such opportunities due to various difficulties.”

According to Loc, such low awareness cannot only be seen with regards to APEC, but also for many free trade agreements (FTAs) that Vietnam has signed and will sign with its foreign partners. “They still think that FTAs are something very big. That’s why they are not interested in them,” Loc said.

Hoang Van Dung, chairman of the 2017 APEC Business Advisory Council, said that APEC offers not only opportunities, but also challenges. Without support, Vietnamese SMEs may suffer from harsh competition from enterprises of other APEC economies.

“However, local firms must also improve their capability by restructuring themselves and improving their productivity and competitiveness if they want to go global,” he said

But TH Group’s Huong said that domestic SMEs can grow further and grab all opportunities given by APEC if they receive more support from the government. “We hope APEC leaders will delve into food security and sustainable agriculture, and find solutions to support firms from APEC economies, especially those from Vietnam.”

One of the four priorities of the APEC Vietnam 2017 is strengthening MSMEs’ competitiveness and innovation in the digital age, with solutions expected to come out in favour of MSMEs.

Vietnam joined APEC in 1998. APEC members account for 78 per cent of FDI, 75 per cent of trade in goods, 38 per cent of official development assistance, and 79 per cent of Vietnam’s international tourist arrivals. Most FTAs that Vietnam has signed or is negotiating are with APEC members.