Austrian $1.8 billion high-tech deal utilises EVFTA edge

Ho Chi Minh City welcomes foreign investors, including those from Austria, to engage in major development projects, a municipal official has said, At the reception (Source: hochiminhcity.gov.vn)

In a meeting with Prime Minister Nguyen Xuan Phuc last week, Ingolf Schroeder, director of circuit board manufacturer AT&S, expressed a plan to establish its manufacturing base in Vietnam. The company intends to develop two factories with the total investment capital of nearly $1.8 billion in the first phase.

The company develops and produces high-tech solutions for its global partners, especially for applications in communications, computer and consumer electronics, mobility, industry, and medical technology. The company has achieved an average growth rate of 7 per cent in the past five years and up to 20 per cent in the past year.

Schroeder said that AT&S is confident it can implement the factory in a short time to serve the huge demand in the field. The company is hurrying to finalise its factory location in mid-April and inaugurate its development by the end of 2021. The construction of the planning factory will be completed within one year.

AT&S also needs to employ at least 1,500 engineers to implement the project. Thus, Schroeder has proposed that the government supports it in human resources and creates favourable conditions for AT&S to build the new factory. He added that Vietnam has introduced some suitable locations like the northern province of Thai Nguyen for factory development.

AT&S will soon make the location decision after taking into account different factors like infrastructure, personnel, supply chain, and others. The company also hopes that the government will soon announce potential incentives.

Austrian Ambassador to Vietnam Thomas Schuller-Götzburg previously said that Austrian companies are eyeing Vietnam thanks to the EU-Vietnam Free Trade Agreement (EVFTA), which will push Vietnam to boost its reforms to attract more foreign companies.

“Currently Austrian companies are talking more and more about Vietnam. I think there are many Austrian companies wanting to do business and investment in Vietnam in many sectors such as construction, engineering, and high technology,” the ambassador said. “The Vietnamese government is now strongly upgrading the country’s infrastructure system to attract more foreign investors. The efforts include plans to build many plants operating in electricity, steel, oil chemicals, and urban development.”

Many other Austrian groups have looked to expand investments in Vietnam, with a focus laid on manufacturing high-tech products.

In a matching webinar between Vietnamese and Austrian investors last December, Thomas Zopfl, director of Wattenspapier under Austrian group Delfort, said that the company purchased a paper processing factory in the southern province of Binh Duong in 2015, establishing its manufacturing hub in the country.

Since then, the company has gained some achievements thanks to the country’s favourable conditions like infrastructure, quality human resources, and a wide range of free trade agreements. “The Vietnamese government’s foreign investment support policy has facilitated Austrian companies to do business here, while political stability and the key role of the government have helped Vietnam successfully cope with COVID-19,” Zopfl explained.

Michael Otter, CEO of Advantage Austria, the international trade unit of the Austrian Economic Chamber, said that Vietnam is the most potential market for Austrian investors in Southeast Asia. “Vietnam and Austria’s economic cooperation has made some important progress with growing bilateral trade turnover, and the opening of a representative office in May 2019 reflects the importance of the Vietnamese market,” Otter said.

Austrian investors are also exploring investment and partnership opportunities in infrastructure, green technology, renewable energy, and Industry 4.0.

According to data from the Ministry of Planning and Investment, Austrian investors are among the top 50 leading investors in Vietnam. As of 2020 end, they had funded 35 projects with the total investment capital of $147.26 million, which is expected to grow on the back of the EVFTA.

Through the agreement, Austrian investors can have more opportunities to provide Vietnam with medical equipment, infrastructure, environment, and renewable energy technology. At the same time, Austrian goods that are unfamiliar to Vietnamese consumers, such as wine and food, will also enjoy tariff cuts and better access to the local market.

Vietnamese Ambassador to Austria Le Dung stated that Vietnam has become an attractive and safe investment destination for foreign investors who are looking to speed up their China+1 strategy. At the same time, the official entry of the EVFTA last August has helped mitigate the impact of the pandemic on bilateral trade between the countries. Therefore, once the pandemic shows signs of fading away, Austrian investors can take advantage of opportunities to invest in Vietnam to penetrate the large population and extend their reach to the ASEAN market.