Chris_pp_Sept22 2009_US Business Convention in BDNC

8/8/2019 Chris_pp_Sept22 2009_US Business Convention in BDNC

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Binh Duong:Binh Duong:Economic Locomotive of VietnamEconomic Locomotive of Vietnam

by Christopher Runckel, President of Runckel & Associates(Business-in-Asia.com)


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Southern Key Economic ZoneSouthern Key Economic Zone

Ho Chi Minh CityHo Chi Minh City

Binh DuongBinh Duong

Dong NaiDong Nai

Ba RiaBa Ria--Vung TauVung Tau

Binh PhuocBinh Phuoc

Tay NinhTay Ninh

Long AnLong An

Tien GiangTien GiangSKEZconsisting of eight localitiesconsisting of eight localities


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Growth:Growth: made up nearly 40% of GDP, 75 % of the country's exportmade up nearly 40% of GDP, 75 % of the country's exportrevenue, growing at a rate of 21.4 % per year, with 65 industriarevenue, growing at a rate of 21.4 % per year, with 65 industriallparksparks

Demographics:Demographics: Binh Duong, Dong Nai and Binh Phuoc haveBinh Duong, Dong Nai and Binh Phuoc have

advantages in manufacturing; HCMC in services, IT and higheradvantages in manufacturing; HCMC in services, IT and highervalue added areas.value added areas.

Market:Market: HCMC, once a pioneer in this field, is now lagging behindHCMC, once a pioneer in this field, is now lagging behindBing Duong, Dong Nai. Hanoi behind Vinh Phuc, Bac Ninh, HaiBing Duong, Dong Nai. Hanoi behind Vinh Phuc, Bac Ninh, HaiDuongDuong

Population:Population: 15.2 mil. or 18% of Vietnam15.2 mil. or 18% of Vietnams populations population

Government Policy:Government Policy: the zonethe zones master plan to 2020 calls for as master plan to 2020 calls for aGDP growth rate 1.2GDP growth rate 1.2--fold higher than the countryfold higher than the countrys GDP growths GDP growthin the 2006in the 2006--10 period, and 1.110 period, and 1.1--fold higher in the 2011fold higher in the 2011--20 period20 period

Why SKEZ is Important?Why SKEZ is Important?


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CostsCosts continue to increasecontinue to increase in Chinain China --government support for FDI decreasinggovernment support for FDI decreasing

Quality ControlQuality Control continues a problem incontinues a problem inChinaChina

SystematicSystematic IP InfringementIP Infringement in China is still ain China is still a

major problemmajor problem

Thailand's political problemThailand's political problem will not bewill not beeasily resolvedeasily resolved

IndiaIndia

--

interesting, but too bureaucratic, toointeresting, but too bureaucratic, too

weak infrastructure, plus issues with supplyweak infrastructure, plus issues with supplychainchain

VietnamVietnam -- has issues but the best value andhas issues but the best value and

good forward potentialgood forward potential -- Japan has movedJapan has movedfrom Thailand to Vietnam as its anchor infrom Thailand to Vietnam as its anchor inSE AsiaSE Asia

What our contacts and ourWhat our contacts and our

observations tell us about Asia?observations tell us about Asia?


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The 2008 survey of Japanese External TradeThe 2008 survey of Japanese External TradeOrganization (JETRO)Organization (JETRO) indicated FDI capital in Vietnamindicated FDI capital in Vietnam

between January and December, 2008 showed anbetween January and December, 2008 showed anincrease of 42.3% over the previous yearincrease of 42.3% over the previous year

As many as 92.6% of Japanese manufacturers and 88As many as 92.6% of Japanese manufacturers and 88% of Japanese non% of Japanese non--manufacturers surveyed in Vietnammanufacturers surveyed in Vietnam

planned for expansion.planned for expansion. These are the highest ratios inThese are the highest ratios inthe Southeast Asian regions according to JETRO.the Southeast Asian regions according to JETRO.

The Japan Bank for International Cooperation alsoThe Japan Bank for International Cooperation alsoranked Vietnam the third most attractive investmentranked Vietnam the third most attractive investmentdestination for Japanese investors for three consecutivedestination for Japanese investors for three consecutiveyearsyears,, after China and India. According to the bank, theafter China and India. According to the bank, the"five top reasons" of Vietnam being a promising"five top reasons" of Vietnam being a promisingprospectprospect are inexpensive labor costs, market growthare inexpensive labor costs, market growth

potential, risk diversification, excellent human resourcespotential, risk diversification, excellent human resourcesand supply base for assemblers.and supply base for assemblers.




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Asian investors still have the most total registeredAsian investors still have the most total registeredforeign investments in Vietnamforeign investments in Vietnam, led by Taiwan and, led by Taiwan and

South Korea.South Korea.The United StatesThe United States is the 7th largest direct investor inis the 7th largest direct investor inVietnam overall. U.S investment has concentrated onVietnam overall. U.S investment has concentrated on

the service sector especiallythe service sector especially the hotel and tourismthe hotel and tourismindustry, such as Cua Dai Beach Resort Starbayindustry, such as Cua Dai Beach Resort StarbayHolding Group based in the U.S. and 5Holding Group based in the U.S. and 5--Star TourismStar TourismComplex by the American group Good Choice in Ba RiaComplex by the American group Good Choice in Ba Ria--

Vung Tau ProvinceVung Tau Province. Other than that are. Other than that are IntelIntel and mostand mostrecently on Sept 4, 2009recently on Sept 4, 2009 CocaCoca--ColaCola announced it wouldannounced it woulddouble its investment in Vietnam by adding US$200double its investment in Vietnam by adding US$200

million in the next 3 years (over the past 15 years, Cocamillion in the next 3 years (over the past 15 years, Coca

--

Cola has invested US$200 million in 3 factories inCola has invested US$200 million in 3 factories inVietnam)Vietnam)




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InfrastructureInfrastructure remains a problemremains a problem

Cost of landCost of land in HCMC and Hanoi have becomein HCMC and Hanoi have becometoo hightoo highSupply chainSupply chain gradually improving, but stillgradually improving, but stilllimitedlimited

PortsPorts can't match China or Thailandcan't match China or Thailand

InflationInflation remains a concern to potentialremains a concern to potentialinvestorsinvestors

Worker turnWorker turn--over rate and access to higherover rate and access to highertrainingtraining a concerna concern

Corruption/transparencyCorruption/transparency need improvementneed improvement

Vietnam's continuing challengesVietnam's continuing challenges


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InfrastructureInfrastructure -- central government doing much but BD doingcentral government doing much but BD doingmoremore -- examples new Highway, Univ, Hosp, New Cityexamples new Highway, Univ, Hosp, New City

Cost of landCost of land -- Binh Duong's land cost remains low and firm soilBinh Duong's land cost remains low and firm soilmake BD even better valuemake BD even better value

Supply chainSupply chain -- government increasing incentives to help attractgovernment increasing incentives to help attract

supply chain companiessupply chain companies -- strong new Vietnam/Japanstrong new Vietnam/Japanrelationship attracting good supply companies. Locations likerelationship attracting good supply companies. Locations likeBD gaining a critical mass of these companies and working toBD gaining a critical mass of these companies and working toattract moreattract more

PortPort -- Central government now realizes investment should beCentral government now realizes investment should bemore focussed.more focussed.

Worker turnWorker turn--over rate/trainingover rate/training -- Government increasing focus onGovernment increasing focus oneducation. BD's focus on creating sustainable community,education. BD's focus on creating sustainable community,creation of University and Hospital limit issue.creation of University and Hospital limit issue.

What Central Gov't & Binh DuongWhat Central Gov't & Binh Duong

are doing to address these?are doing to address these?


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About Binh DuongAbout Binh Duong

GDP:GDP: growth rate of 14.8%growth rate of 14.8%

Location:Location: at the heart of theat the heart of theSKEZ; only 30 km fromSKEZ; only 30 km fromHCMC and rich in mineralHCMC and rich in mineral

resoucesresouces

Investments:Investments: the provincethe provincehas 28 operational industrialhas 28 operational industrialparks. Much of Binh Duong'sparks. Much of Binh Duong's

success is attributed to closesuccess is attributed to closeproximity to majoy markets,proximity to majoy markets,experienced and consistentexperienced and consistent

economic leadership,economic leadership,

relatively well developedrelatively well developedinfrastructure and localizedinfrastructure and localized

incentive packages for investorsincentive packages for investors


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About Binh DuongAbout Binh Duong

Supported Government Policy:Supported Government Policy: under the country's masterunder the country's masterdevelopment plan, Binh Duong Province is expected to have 31development plan, Binh Duong Province is expected to have 31industrial parks by 2020 with a combined area of 8,360 hectaresindustrial parks by 2020 with a combined area of 8,360 hectares

and 23 industrial clusters covering 2,704 hectares. Binh Duongand 23 industrial clusters covering 2,704 hectares. Binh Duongalready has 28 industrial parks and 10,000 companies doingalready has 28 industrial parks and 10,000 companies doingbusiness in the province.business in the province.

In the Provincial Competitiveness Index (PCI) ranking:In the Provincial Competitiveness Index (PCI) ranking: a surveya surveyof the business climate in Vietnamof the business climate in Vietnams 64 provinces and citiess 64 provinces and cities --Binh Duong was number one for 3 consecutive years. However,Binh Duong was number one for 3 consecutive years. However,

last year BD lost the #1 slot to Danang with final scores differlast year BD lost the #1 slot to Danang with final scores differingingby less than half a pointby less than half a point -- BD mainly lost on Port/Airport andBD mainly lost on Port/Airport andTransparency which marked down Binh Duong's website andTransparency which marked down Binh Duong's website anddisplay of information. Later being addressed now.display of information. Later being addressed now.


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About Binh DuongAbout Binh Duong Despite difficulties resulting from global economic downturn,Despite difficulties resulting from global economic downturn, BinhBinh

Duong attracted more than 2 billion USD in foreign directDuong attracted more than 2 billion USD in foreign direct

investment (FDI) this year, doubling its yearly target. In 2008,investment (FDI) this year, doubling its yearly target. In 2008, thetheprovinceprovinces performance regarding the disbursement of FDIs performance regarding the disbursement of FDIcapital reached 64%capital reached 64% one of the countryone of the countrys highest levels.s highest levels.

The province has over 3,200 business investment. For foreignThe province has over 3,200 business investment. For foreigninvestment, there are 16 new projects licensed this yearinvestment, there are 16 new projects licensed this year with awith a

total investment of US$1.7 billion (including private projects itotal investment of US$1.7 billion (including private projects in then thecommercial area, housing and Phu Hung Long investment) and 5commercial area, housing and Phu Hung Long investment) and 5additional projects with total capital increased by US$4.8 milliadditional projects with total capital increased by US$4.8 millionondollars. The industrial parks attracted US$ 499 million,dollars. The industrial parks attracted US$ 499 million,accounting for 22%.accounting for 22%.

In addition to major foreign investors,In addition to major foreign investors, including Taiwan , theincluding Taiwan , theRepublic of Korea and Japan , the province has seen a host ofRepublic of Korea and Japan , the province has seen a host of

newcomers, such as the Netherlands, Finland, Denmark, the USnewcomers, such as the Netherlands, Finland, Denmark, the USand the UK.and the UK.


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Why Binh Duong?Why Binh Duong?

National HighwayNational HighwaySystem:System:

TPHCMTPHCM--Can ThoCan ThoGiau DayGiau Day--Da LatDa LatHCMCHCMC -- Dau DayDau Day -- HanoiHanoi

Regional HighwayRegional HighwaySystem:System:

TPHCMTPHCM -- Moc BaiMoc BaiTPHCMTPHCM -- Hoa LuHoa Lu

Bien HuaBien Hua -- Vung TauVung TauTPHCMTPHCM -- Giau DayGiau Day

Ringroad SystemRingroad System

Binh DuongBinh Duong -- a good location to reach throughout the SKEZa good location to reach throughout the SKEZand Nationallyand Nationally -- new highway and new roads in provincenew highway and new roads in province

improving thisimproving this


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"Binh Duong, Inc.""Binh Duong, Inc." --

Binh Duong is theBinh Duong is the

province with a plan andprovince with a plan andthe ability to make it workthe ability to make it work

-- leadership of provinceleadership of province

has vision, vision is inhas vision, vision is inprocessprocess -- not just plansnot just plans --

action, one stop shop,action, one stop shop,

not just economic butnot just economic butsocial planning,social planning,

infrastructure among theinfrastructure among the

best in Vietnam andbest in Vietnam andimproving,improving,

Why Binh Duong?Why Binh Duong?


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More Than Just a Factory LocatioMore Than Just a Factory LocatioBinh Duong new cityBinh Duong new city is ais a

project conceived by the Binhproject conceived by the Binh

Duong provincial governmentDuong provincial government

and the provinces leadingand the provinces leadingstatestate--owned company,owned company,

Becamex IDCBecamex IDC

Corporation.Corporation. The projectThe projectinvolves a new provincialinvolves a new provincial

capital with surroundingcapital with surrounding

industrial parks and factoriesindustrial parks and factoriesand integration of workand integration of work

locations, housing and publiclocations, housing and public

amenities, university, hospital,amenities, university, hospital,etc. that is already taking shapeetc. that is already taking shape

in h r vin .in the rovince.


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Next StepsNext Steps

Do your due diligence/researchDo your due diligence/research

Compare regionallyCompare regionally -- if you do you will beif you do you will beconvinced Vietnam is a winnerconvinced Vietnam is a winner

In Vietnam, compare the provinces andIn Vietnam, compare the provinces and

compare the industrial parkscompare the industrial parks Visit Binh DuongVisit Binh Duong -- meet with local officialsmeet with local officials

and high quality industrial park companiesand high quality industrial park companies

like My Phuoc Industrial Citylike My Phuoc Industrial City Binh Duong is the place to beBinh Duong is the place to be


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Documents

Chris_pp_Sept22 2009_US Business Convention in BDNC