[Vnbiz] Vietnam still a worthwhile low-cast market for investors

[Tai Phan]

Vietnam still a worthwhile low-cast market for investors
By Ca-mie De Souza, Channel NewsAsia | Posted: 03 January 2008 1730 hrs
         Photos 1 of 1
An employee arranges shoes at the booth of local shoe maker Vina Giay (Vina
shoes)

HANOI: Vietnam is one of the fastest-growing economies in the region today -
and attracting huge inflows of foreign funds.

Foreign direct-investment pledges in 2007 have jumped sharply - with the
latest count at more than US$20 billion.

That's up sharply from US$12 billion in 2006.

However, risks abound where there are opportunities.

Sinh Cafe comes highly recommended in many travel guides, offering trips for
the no-frills backpacker.

But soon you'll realise that on almost every street in the Old Quarter of
Hanoi, you'll chance upon one or even more Sinh Cafes.

Which of these is the real McCoy?

Binh's boss started his successful business in Ho Chi Minh City more than 10
years ago. But he could not beat the copycats who got to the northern city
before him.

And that's a bane of foreign investors - weak intellectual property rights
protection.

Other complaints include worries over the state of the country's
infrastructure and legal system.

But still, Vietnam boasts many plus points for potential investors - a young
workforce and a growing market of eager consumers.

IE Singapore, which helps Singapore companies to internationalise, said
opportunities abound in real estate, logistics, ports and healthcare.

And also in provinces around Ho Chi Minh City and Hanoi.

Chiong Woan Shin, Centre Director, IE Singapore, said: "As the cities grow,
these provinces around the cities become the immediate hinterland and
provide good opportunities for our boys who should actually seize the first
mover's advantage before the bigger boys from the US, Japan and Korea
actually move in."

So are Singapore companies savvy enough for this market?

Mr Chiong Woan Shin continued: "The Vietnamese business community has often
given this comment that while Singapore players are good business partners
because they deliver on what they promise, they often fall short in the
decision-making process. Singaporeans are known to be very cautious."

"The second comment they always make is the fact that Singaporeans are too
straightforward and direct, very often in meeting potential Vietnamese
partners, they cut to the chase and go straight to the point. But in
Vietnamese culture, the process of making friends is also a way to assess if
a person can be a potential partner," he added.

Today, whether, in food, footwear or garment manufacturing, Vietnam has
started to compete successfully with its northern neighbour China.

Now that the US and other markets have been spooked by reports of
adulterated Chinese products, ranging from food to toys, Vietnam's exporters
stand to benefit as an alternative source, while China solves its quality
control issues.

And the country is being transformed as it develops.

On crowded city streets and bustling factory floors, the Vietnamese are
visibly leaving their old ways behind and embracing the certainty of better
days ahead.
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