Vietnamese companies confident to integrate

Tuesday, Feb 09, 2016 08:00

Vietnamese companies face integration pressure with a series of trade deals signed in 2015 and early 2016, including the Trans-Pacific Partnership (TPP) and a slew of free trade agreements, and the establishment of the ASEAN Economic Community (AEC). Viet Nam News asks company chiefs and business groups to do some crystal gazing about opportunities, challenges and economic prospects in 2016.

Ha Chan Ho, senior strategic advisor to Samsung Electronics Viet Nam

Samsung has so far invested US$14.8 billion in Viet Nam, making it the largest foreign direct investor and employer. Besides, 30 per cent of Samsung Electronics Corporation's workforce is in Viet Nam.

Samsung was also the biggest contributor to Viet Nam's exports in 2015, accounting for 20.2 per cent with $32.7 billion. We will continue to bring "made-in-Viet Nam" products of global quality to customers world-wide. We now have more than 110,000 employees in Viet Nam.

The above numbers emphasise Viet Nam's importance to Samsung. We believe our partnership with Viet Nam will continue to benefit each other in 2016.

In 2014 and 2015 Samsung co-operated with the Ministry of Planning and Investment and the Ministry of Industry and Trade to hold seminars on supporting industry development to find potential local suppliers. We also visited several Vietnamese vendors to check their capabilities, and invited about 20 Vietnamese suppliers to visit Samsung's first and second suppliers. Samsung also brought three experts from Korea to help four Vietnamese suppliers enhance their capacity. This was a pilot project in 2015 and we expect to expand it in 2016.

Samsung is willing to collaborate with local suppliers and contribute to the development of Viet Nam's supporting industry. Samsung does not give any kind of favoured treatment to any particular companies. Any supplier that meets Samsung's standards of quantity, quality, timely delivery has an equal chance to join our supply chain. It will benefit both Samsung and Viet Nam if there are more parts suppliers near our factories in Bac Ninh and Thai Nguyen. Samsung will prioritise placing orders with local businesses if they are able to meet our standards.

One thing I can reveal is that Viet Nam is the biggest production hub of Samsung Electronics, and we will continue to expand our business [here]. We are always trying to find business opportunities and devoting our human resources and technologies to contribute to a better future for Viet Nam.

Tao Ðuc Thang, Deputy General Director of Viettel

Last year Viettel started operating in two new markets – as Halotel in Tanzania and Lumitel in Burundi. With these two new markets, our company has now invested in 10 foreign markets with a population of 270 million, three times bigger than Vi?t Nam.

We have broken even in six out of the 10 markets. This year we hope to start getting profits from the rest.

Last year revenues from foreign markets were worth nearly US$1.5 billion, a year-on-year increase of 25 per cent.

Investing abroad is one of Viettel's three main strategies. That is why the company targets becoming one of the top 10 telecom companies in the world in terms of investing abroad by 2020. By then, we hope to be in 20-25 international markets with a population of 600-800 million.

On average, Viettel invests in two new markets a year. Turnover from foreign markets is apace with the company's strategy. We plan to maintain growth of 15-20 per cent a year and break even in a new market in three to five years.

East Timor is a small market. It is difficult to set up infrastructure due to its mountainous terrain. However, it has brought us fruitful results. It was the first market where Viettel recouped its investment within six months.

To Vietnamese companies who want to invest abroad, I want to quote an African proverb that I think is completely correct: If you want to go fast, go alone; if you to go far, go together.

We have been a pioneer and we hope that other companies will go with Viettel like we did in the past. ‘Together for the Better.'

With determination, Viettel and other Vietnamese companies can be confident and compete in the global market.

Pham Ngoc Hung, Vice Chairman of HCM City Union of Business Associations

To discuss the economic prospects for 2016, we should first discuss about the economy in 2015.

Last year the economy grew significantly, especially in HCM City where local companies achieved a growth of 10 per cent. This was 1.5 times the average for the country.

The performance could be attributed to the support from the Government and the city. Many programmes to stimulate the market, improve human resources and offer credit at preferential interest rates were organised to help companies overcome difficulties and expand.

Many companies in HCM City have prepared well for 2016, a year of deep integration when the ASEAN Economic Community will be in place and Viet Nam becomes a member of many important free trade agreements.

The integration will bring more opportunities for companies, especially exporters. Moreover, there will be opportunities to expand business and co-operation in all sectors. Thanks to that, there will be a leap for the economy. And I expect companies in HCM City to continue to grow at more than 10 per cent.

The challenges, I think, will be mainly for small and medium-sized enterprises because they lack the capability to immediately transform and adapt to new regulations. However, these challenges and obstacles will soon be swept away. In my opinion, it will take them only two years to overcome difficulties.

Friedrich Weiss – CEO of Home Credit Viet Nam

Based on the optimistic forecasts of economic institutions like IMF and World Bank, I believe Viet Nam will achieve a high growth rate in 2016, as high as the 6.6 per cent targeted by the Government. Given the positive outlook for Viet Nam's economy, credit operations by financial institutions would also see strong growth, especially consumer finance.

Vi?t Nam with its big population and a majority of that at working age offers much potential for consumer finance especially since just a small part of the population can now access financial services provided by banks. According to a study by the Strategy Institute of the State Bank of Viet Nam in 2013, the consumer lending market grew by 20 per cent annually in 2009-12.

The consumer finance market will see severe competition in the near future as many banks plan to set up their own finance companies to focus on consumer lending. However, competition will bring benefit to customers in Vi?t Nam and the evidence is that consumer lending rates have been on a downward trend, even down to 0 per cent, which you could not have imagined just three years ago.

Joining international economic agreements will benefit Viet Nam's economy as goods will be diversified and have more competitive prices, prompting an increase in consumption. Vietnamese workers' incomes will improve, increasing their purchasing power. In addition, when the economy is more open, more companies selling goods will enter Viet Nam, and that will be a great opportunity for financial institutions to expand partnership networks to serve more customers.

Alexandre Dardy, CEO of Lazada Viet Nam

Ecommerce is seeing a positive trend, and we expect it to continue in 2016. We are in a positive spiral where customers and retailers are showing more and more interest in a shopping channel that has proven its value to customers over the last few months: price competitiveness, assortment breadth and convenience.

I think this is a great opportunity for the Viet Nam e-commerce market to grow even faster. Joining AEC and TPP will cause Viet Nam's international trade to expand: consumers will have a larger, more diverse assortment of goods to choose from.

Of course, Lazada will investigate the new opportunities that TPP and AEC will offer, with respect to our ability to both sell and source abroad. However we are mainly interested in sourcing competitive products from abroad and offer them to Vietnamese consumers. — VNS

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