US brands make mark before TPP

Major league US firms are setting up shop in Vietnam to take advantage of TPP benefits
Photo: Le Toan

Nguyen Viet Ha, managing director of US-backed investment consultant BowerGroupAsia Inc., told VIR that US’ cartoon making giant Walt Disney just opened its representative office in Ho Chi Minh City this month.

By setting up physical presence here, the group can directly distribute its products to partners in Vietnam, and protect its copyright in the country. Walt Disney also wishes to provide designing consultancy for partners in Vietnam to build theme parks under the Disneyland model.

“In addition to Walt Disney, many others are also seeking investment opportunities in Vietnam,” Ha said.

Last week Coca-Cola met with Hanoi’s authorities regarding the building of a 20-hectare project in the city. The group is planning to invest another $300 million in Vietnam over the next few years. Coca-Cola has already invested $700 million here between 1994-2015, with some $300 million invested during 2013-2015.

Over 50 US companies attended the “Meet the USA” conference held last week by Vietnam’s Ministry of Foreign Affairs and the US Embassy to Vietnam.

“Many investors and companies are already positioned here [Vietnam], while others are looking to locate here,” said Michael Trueblood, director of the United States Agency for International Development’s (USAID) Economic Growth and Governance Office.

According to Trueblood, Vietnam, as part of the Trans-Pacific Partnership (TPP), has tremendous market potential with the world’s 14th largest population and a rapidly growing economy. The country is stable and strategically located in Southeast Asia. The workforce is disciplined and hard working. Vietnam is poised to experience rapid economic growth and has been encouraging strong economic reform efforts via Resolution 19, which promotes productivity and private sector competitiveness.

“Tariff reductions within the TPP, especially in apparel and footwear, will likely bring the most immediate benefits, especially as Vietnam gains better access to the US market, which is huge,” said John Hill, economic counsellor for the US Embassy to Vietnam. “Vietnam is sending so many positive signals to the outside world, and because Vietnam is such an attractive investment destination, I see more and more US businesses looking to Vietnam as a destination – for production, distribution, and new markets.”

Two weeks ago, US investment fund 500 Startups announced the launch of a $10 million micro fund that will invest solely in Vietnamese startups. The organisation plans to fund 100-150 companies that have some connection to Vietnam, with checks ranging from $100,000 to $250,000.

In another case, Black & Veatch, which implements over 30 projects in Vietnam, announced last week that it was recruiting more employees for its expansion in Vietnam. Currently, the company is working with Japan’s Sumitomo Corporation to serve as technical lead on the expansion of the Duyen Hai 3 power plant in the southern province of Tra Vinh. Expected to be completed by 2018, the plant will meet 10 per cent of Vietnam’s annual electricity demand.

Last month in Washington D.C, Prime Minister Nguyen Tan Dung met with the leaders of US firms IBM, Microsoft, and Cisco expected to continue boosting their operations in Vietnam.

Also in February 2016, Vietnam’s Bank for Investment and Development of Vietnam (BIDV) and life insurer BIDV MetLife signed a co-operation deal to promote life insurance activities in Vietnam. Vietnam’s Bien Dong Seafood also inked a contract with US’ H2Origins Seafood Inc. to lift its Vietnamese aquatic product sales revenue to over $300 million over the next three years. Vietnam’s Thai Group and US’ Hyatt also signed a $165 million deal on building a Park Hyatt Hanoi hotel slated for completion in 2018.

US Ambassador to Vietnam Ted Osius said that he “would like to see the US become the number one investor in Vietnam,” but stressed that US firms were seeking more improvements in the local business climate.

According to Osius, US firms need confidence and security in their investments here. This means a level playing field, especially in terms of property rights and rules of competition that are clear and well enforced. These are reforms that must be led at a national level.

“Firms are seeking a labour force with the skills and education to compete in an integrated global economy, especially as they plan to move their operations up the value chain,” Osius said. “They also need a backbone of modern services and infrastructure allowing them to connect to their global trade networks.”