Compal’s long journey to end

The world’s largest contract manufacturer of laptops is in the final stretch of putting its first factory in Vietnam into production in 2011’s first quarter.

Taiwan’s Compal Electronics will complete construction of its $500 million factory in the northern Vinh Phuc province next month and start production two years later than initially planned. Once completed, it will produce 500,000 laptops per month.

“They [Compal executives] reported that production would start at the end of the first quarter 2011,” said Bui Van Quy, vice head of Vinh Phuc Industrial Zones Management Authority.

The factory is located at the company-backed Ba Thien Industrial Park. Compal started construction of the factory in November, 2007 and initially planned to produce laptops in 2009’s first quarter. However, the  global financial crisis took its toll.

“After two years of delays, the investor is pushing project construction very quickly,” said Quy, adding that the company wanted to start production to take advantage of Vietnam’s competitive labour costs.

Compal has pumped $23 million to clear the factory site and construct two blocks of the manufacturing facility, according to Vinh Phuc Industrial Zones Management Authority. The company  has also spent nearly $13 million developing infrastructure at the Ba Thien Industrial Park.

Compal, which handles the production of notebook computers and monitors for clients like Acer Inc, Dell, Toshiba, Hewlett-Packard, is the first foreign investor building laptop manufacturing factory in Vietnam.

The Vietnamese government offered Compal a favourable 10 per cent corporate income tax for its project’s lifetime of 50 years while the current tax for Vietnam-based enterprises is 25 per cent. Particularly, Compal will enjoy a 10-year period of corporate income tax exemption.

Quy said Compal’s project would not only create jobs and contribute to the local budget, but also help to develop Vietnam’s electronics industry by luring new investments  to the country.

Over the past three years, eight Compal suppliers have registered to build manufacturing factories worth more than $100 million in the Ba Thien Industrial Park to supply laptop components to Compal.