Jun 30, 2012

Vietnam - FIEs’ exploit and the reverse of the medal

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VietNamNet Bridge – The exports by foreign invested enterprises (FIEs) always account for the big proportions in the total export turnover. However, this is not an integral joy.

By June 15, 2012, the export turnover of mobile phone products and mobile phone parts gained by FIEs had reached 4.322 billion dollars, according to the General Department of Customs. The figure represents the sharp increase of 126 percent, or 2.41 billion dollars in comparison with that of the last year. With the big achievements, mobile phone remains the second most important export item for Vietnam.

Samsung Electronics Vietnam (SEV) has been well-known as the biggest exporter in the mobile phone sector. In 2011, SEV exported 6.1 billion dollars. Meanwhile, it has exported four billion dollars so far this year.

A senior executive of SEV has affirmed that the company would maintain the high export growth rate in the time to come, because Galaxy SIII, the key product of Samsung, which has been catching the special attention of the global market, has also been made in SEV’s factory in Bac Ninh province.

Kim Yong Seok, Planning Director of Samsung Complex, said he hopes the export turnover would reach 10 billion dollars this year.

Meanwhile, Samsung Vina – a “brother” of SEV, also obtained the export turnover of 80 million dollars, making a contribution to the FIEs’ total export turnover of 26.2 billion dollars by June 15, 2012, an increase of 43.6 percent in comparison with the same period of the last year, accounting for 54.3 percent of the total export turnover of the whole country (48.235 billion dollars).

Highly appreciating the achievements by FIEs, stressing that the majority of FIEs’ exports are manufacturing and hi-tech products, Dr Nguyen Mai, Deputy Chair of the State Committee for Cooperation and Investment, said this should be seen as a good thing.

“This shows that Vietnam has been following the right way when attracting foreign direct investment,” Mai said.

Right from the very beginning when Vietnam started to attract FDI, we set up the goal of boosting exports, especially manufacturing and high technology products,” he continued.

The annual statistics show the increasingly big role of FIEs in boosting exports. In the first months of the year, when the export by domestic enterprises slowed down, FIEs still witnessed an impressive growth rate. Not only mobile phones--other high technology products were also exported in big quantities. Computers, electronics and electronic parts had brought the turnover of 3.064 billion dollars by June 15.

Besides Samsung, Intel and Canon were also the big exporters. According to the Ministry of Industry and Trade, Canon Vietnam, which has branches in Hanoi and Bac Ninh, exported 1.5 billion dollars worth of products. Meanwhile, Intel Vietnam’s export turnover was 462 million dollars.

Vietnam has every reason to hope that the hi-tech exports would increase further in the time to come, when Nokia’s mobile phone factory becomes operational, slated for 2013. Meanwhile, other foreign investors such as Wintek and Kyocera, have also been planning to expand their business in Vietnam.

More importantly, once Samsung, Intel or Canon export products to the world market, the name of Vietnam has been added into multinational groups’ global production chains.

However, analysts have pointed out that while FIEs obtained big export turnover, they had to pay big money for imports. According to the General Department of Customs, the import turnover by FIEs by June 15 had climbed to 25.3 billion dollars, up by 25 percent over the same period of the last year, accounting for 51.9 percent of the total import turnover.

“It is necessary to calculate how high the added value created in Vietnam in the production chain,” Mai commented.

However, Mai said, FIEs should not be blamed for the high imports. The foreign manufacturers really want to increase the locally made content ratio in products, but this remains impossible due to the weak supporting industries in Veitnam.

Kim Yong Seok from SEV also said that the localization ratio at SEV is just 20 percent.

Source: TBKTVN


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