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VietNamNet Bridge – The import tariffs on finished products from regional
countries have been gradually lowered to zero percent, which has raised the
concern that foreign invested enterprises (FIEs) will stop producing in Vietnam
and shift to import products to sell domestically.
“We are still thinking about where is the best place in ASEAN to set up our
factories. We have an LCD TV production factory in Indonesia already. I think
that focusing on one production base would be a good solution that can help
reduce expenses. Maybe we will relocate the production base to Indonesia,” he
said.
Toshiba Vietnam now has a factory in Thu Duc district in HCM City that prodices
LCD TVs and DVD players. The factory began operating in 1996 and the products
have been mainly distributed in Vietnam’s market.
Toshiba said it has not made final decision, however, people said that it would
be quite understandable if the group decided to stop the production line in
Vietnam and focus on the production line in Indonesia.
Prior to that, in 2008, Sony also decided to make TV tubes in Vietnam and focus
on importing products and selling import products in the domestic market. After
the “Sony’s story”, experts have warned about the new wave of foreign producers
leaving Vietnam. Most recently, Deputy Minister of Industry and Trade Nguyen
Thanh Bien admitted that there are signs of the wave, especially in electronic
products.
Currently, most of Toshiba LCD TVs sold in Vietnam have been imported from
Indonesia. Other electronics available on the domestic market also have been
imported from Indonesia and Malaysia while only a small number of products are
assembled in Vietnam.
The impacts of the global integration
Pham Chi Lan, a well known economist, sees the tendency of FIEs importing
products to sell domestically instead of maintaining production in Vietnam as
the result of the global economic integration.
Since 2006, Vietnam has been cutting tariffs on products imported from ASEAN
countries. Products have been enjoying very low tariffs of 0-5percent.
Lan said that the tariff cuts have made foreign investors rethink their
investment strategies. The enterprises, especially the ones which make products
for exporting, should think about if they should gather production on one place,
or set up different production bases.
“They may understand that it would be less profitable to make products in
Vietnam than to import products from other countries and sell them
domestically,” Lan said.
“I’m worried that the movement of FIEs stopping production in Vietnam and
shifting to distribute imports in Vietnam will also occur in other fields, such
as automobile and mechanical engineering production,” Lan said.
She went on to say that the tools Vietnam has been using to attract foreign
investment since 2005 have not brought the desired effects.
“Now is the right time for Vietnam to become more selective in receiving foreign
investment,” Lan said. “What Vietnam needs are investments in fields which can
bring high added values, and technology transfer.”
Lan has also urged the government to reconsider the commitments made by foreign
investors and check if the investors have fulfilled their commitments. “When
they do not fulfill their commitments, we should remove the investment
incentives we promise,” she said.
Source: Thoi bao Kinh te Saigon
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