A number of foreign technology firms like South Korea’s LG, Japan’s Fuji Xerox and Taiwan’s Compal have recently unveiled plans to increase investments or resume their half-done projects in Vietnam to benefit from low costs and incentives offered by the Government.

LG Electronics is expected to move its TV production in Thailand to Vietnam in late April or early May this year to reduce costs, according to Reuters.

LG produces around 600,000 TV sets annually at its plant in Thailand, with 100,000 of them for export.

In Vietnam, LG originally injected only US$300 million into manufacturing electronic devices and household appliances at Trang Due Industrial Park in Haiphong City, but later decided to raise the figure to US$1.5 billion to make its complex in Vietnam a key manufacturing base. LG will export all products made in Vietnam. 

Nipon Wongsaengarunsri, marketing director of LG Electronics Thailand, told Reuters that the group wants to have one regional TV production base with new machines comparable with those at its plants in South Korea, and Vietnam is considered the best place.

Nipon said the parent company considered Vietnam the most worthwhile country to invest in. He explained wages are one factor but the main one is to ensure quality and make the most of logistics.

According to Reuters, it takes the group a couple of weeks to take delivery of parts imported from China to Thailand while with the production facility in Vietnam it takes only one week.

A source from LG Electronics in Seoul said the group’s TV production in Thailand is quite small. Therefore, merging the facility in Thailand with the one in Vietnam will help increase the firm’s output.

Industry insiders said as the Government is offering many incentives to foreign enterprises in the hi-tech sector, LG’s relocation of production lines in Thailand to Vietnam to improve business efficiency is understandable.

International media reported that Taiwan-based Compal Electronics will resume operation of its plant in Vietnam this year to enjoy the incentives and deal with rising labor costs in China.

In 2007, Compal announced an investment of US$500 million in a laptop production facility in Vietnam and was expected to operate it in 2009. But the project was then postponed.

Compal’s plant in Vietnam will produce smartphones instead of laptops as initially planned. Compared to other smartphone production facilities of Compal in China, the Vietnam factory is closer to the smartphone supply chain in Shenzhen in the northern neighbor.

Currently, Fuji Xerox is planning to develop one more factory in Haiphong City as it regards the northern city as a key production base in the region.

Taiwan’s Kingtec Group is now constructing a plant at My Phuoc 3 Industrial Park in Binh Duong Province to turn out electronic products for export to Europe and America. The project has an investment of US$30 million in the first phase.

Microsoft said last year that its smartphone production lines in China, Hungary and Mexico would be moved to Vietnam and that the Nokia plant in Bac Binh Province would be its major production facility.

Seeing Vietnam as one of its important production bases, Intel is expanding investment in its semiconductor assembly and test facility at HCMC’s Saigon Hi-tech Park.

Analysts said many multinationals have chosen Vietnam after they coped with unfavorable market movements in China. In addition to many investment incentives offered to technology firms, water and electricity costs in Vietnam are lower than other markets.