Southern hub FDI expansion

According to the Ho Chi Minh City Department of Planning and Investment, the city’s 65 on-going foreign direct investment (FDI) projects have asked to supplemental capital of $168.9 million in the year ending September, 2010.

Most of the projects cover the manufacturing, industrial, retail and service fields with an average supplemental capital of less than $15 million per project.

Among the foreign-backed companies asking for capital additions, Lotteria Vietnam Co., Ltd. sought an additional $7 million to expand services network, footwear company Adidas Vietnam supplemented $1 million, bringing its Ho Chi Minh City-based investments to a total $3.9 million and Singaporean retailer Giant South Asia injected $15 million in expanding distribution agents and warehouses system, raising its investments to $20 million.

The deputy director of the city’s Department of Planning and Investment Lu Thanh Phong said in the past two years more foreign-backed companies operating in manufacturing, processing and industrial production areas in the city had asked to supplement their investment capital. Particularly, 115 Ho Chi Minh City-based FDI projects asked for a total supplemental capital of $317 million in 2009, 1.79 per cent increase on-year.

Deputy head of Ho Chi Minh City Export Processing Zones and Industrial Zones Management Authority (Hepza) Nguyen Tan Phuoc said many medium-sized foreign businesses had decided to expand their Vietnam-based operations after surveying the Vietnamese market.

“It must be noted that medium-sized investment projects feature quicker disbursement and higher realised capital amounts,” Phuoc said.

According to a source from Yuki Vietnam Co., Ltd, under Japan’s Yuki Group which currently accounts for 30 per cent of the global market share in the production and supply of industrial sewing machines, the company recently pumped $5 million into leasing more land for workspace expansion.

The company’s investment in Vietnam now amounts to $20 million after three capital increases since it first opened a manufacturing plant in Ho Chi Minh City’s district 7’s Tan Thuan Export Processing Zone in 1994.

Yuki Vietnam Co., Ltd.’s general director Tsunoda Shinji said the jump in the investment capital was targeted to increase domestic market sales alongside serving export demand.

The company posted revenue of $16 million annually and it was expected to hit $24-26 million per year in the near future.

“Made-in-Vietnam products will later be exported to India, Bangladesh and Indonesia, and part will be sold in the domestic market whereas all the products made by Yuki’s three China-based plants are sold in Chinese market only,” said general director Tsunoda Shinji, adding that Yuki would soon get permission to manufactur and sell products in the Vietnamese market.

Around 50 per cent of Vietnamese garment companies are reportedly using Yuki-branded sewing machines.

Besides industrial production, lately Australia-backed RMIT University unveiled its intention to invest $15.1 million more in building student hostels for the South Saigon RMIT campus alongside adding $6.5 million more to its prescribed capital.

RMIT Vietnam director Merilyn Liddell said that the move was part of South Saigon RMIT space expansion plan to meet Vietnam’s ever-increasing demand for world-class education.