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Newspaper: Nhip Cau Dau Tu
January 18, 2010
This page is translated from orginal Vietnamese version.
 Difficulties in obtaining capital temporarily delay investment projects by Overseas Vietnamese while other projects are on hold. However, it has been observed that no investors tend to quit, as there are still huge investment potentials in the motherland, according to them.
The amount of overseas national currency exchange to Vietnam reached $6.283 billion USD in 2009 – a 12.8% decrease compared to 2008. In Ho Chi Minh City particularly, this decreasing rate, estimated by the commercial banks, could be even higher, possibly about 15%. The amount of investment projects and investors has gone down. Beside the global economic downturn, what are the other reasons? Join the Bridge of Investment to review the investment stories by the overseas Vietnamese last year and listen to their implementation plans for this year.
Ups and Downs in 2009
Early 2009, Mr. Nguyen Van Loi, Vietnamese – Japanese, returned to Viet Nam for the Lunar New Year vacation, wanting to lease out land for forestation in Viet Nam. One of his relatives suggested a large plot of forest land of about 300 hectares (including 100 ha of flat land, the remaining 200 hectares of hills and mountains) in Bao Loc, Lam Dong. This 300-hectare land was allocated to a forestation enterprise by the government with a maximum term of 50 years. The business owner assigned Mr. Loi a price of 40 million VND/ha -- a total of 12 billion for 300 ha of land.
To have enough money for the project, he returned to Japan and sold one of his family’s three fast food restaurants in Hitachi city (150 km away from Tokyo capital to the north. However, the deal failed and consequently stopped his forestation project. He said that the collapse of the investment bank Lehman Brothers in September 2008 in the United States caused him to quit the "put all eggs in one basket" business model. How did the collapse of the bank across the ocean influence small investors such as Mr. Loi?
Previously, Mr. Loi invested heavily in the Hitachi city social welfare fund. In early 2007, this fund provided more than $600,000 USD to buy Lehman Brothers bonds. When Lehman Brothers declared bankruptcy, investors and city social funds disappeared.
But that was not the end. When he returned to Japan to transfer the restaurant to fund the forestation project in Bao Loc, he learned that a major commercial center in Hitachi closed because a large economic group stopped funding it. One of his three restaurants in the commercial center also closed. Vietnamese - American investors proposed to bid again on the 300 ha of land with 43.5 million VND / ha for planting timber. "I have nurtured this forestation project from more than a dozen years ago, but when I have an opportunity on native soil and I cannot make it happen, I feel very sorry," Mr. Loi shares.
Although without the same difficulties as Mr. Loi’s investment, the investment projects of other Vietnamese – Americans risk disruption. The Da Phuoc solid waste processing complex zone project is an example. Headed by Mr. David Duong, its Vietnamese-American Chairman and CEO, the Vietnam Waste Solutions Company (VWS) began implementation of the Da Phuoc solid waste processing complex zone project in 2007. On 128 hectares of land in the Da Phuoc commune, Binh Chanh District (HCM City), with total capital of $90 million USD. Da Phuoc received and processed approximate 3,000 tons of waste every day. In meetings with the delegates of Union National in May 2009, the Department of Natural Resources and Environment of Vietnam said it would speed up the clearance and allocate land to investors in October June 2009. However, to date, VWS still has not received 55 hectares of expected land.
Not wanting to continue to wait, Mr. David Duong, in a meeting between leaders of the People's Committee of Ho Chi Minh City and investors in early December, promised to borrow money so that the city could in turn use it as a source to compensate people for the land clearance. His hope was that the company would soon have clean soil resources. "Hopefully the city will allocate clean land before this Lunar New Year as promised," he said.
During a telephone exchange with us from America, Mr. David Duong said that from 2007 to present, the company has invested nearly $75 million USD to Da Phuoc ($9 million of which is backed by the city). Particularly in 2009, the company has spent about $35 million USD in investment projects, including three factories producing organic fertilizer from waste and transfer recycling stations in the Da Phuoc area. They are expecting to complete three such projects before this Lunar New Year.
While the municipal government is trying to provide the investors with clean water, some have disagreed with the price $16.40 USD/ton to dispose of the solid waste by VWS. Moreover, during the Municipal People’s Committee’s meeting last August, other objections were also raised, further slowing the land clearance process and land delivery.
Mr. Nguyen Quoc Hung, a Vietnamese American and LogiGear President/CEO, says that it is not the kind of financial challenge that would stop the investment once the project starts. Last year, LogiGear Corporation, formed by Mr. Hung Nguyen 16 years ago, suffered from the America’s economic downturn.
To be sure, the corporation’s revenue has decreased by 20% together with a manpower reflecting that in Vietnam. In Vietnam, the human resource decrease rate is 20%, Hung said. This difficulty has delayed LogiGear’s predictions and development strategies for software testing in Vietnam.
Software Testing is a new industry not only in Vietnam but also throughout the world. In 1994, Mr. Hung Nguyen founded LogiGear in the USA with only 5 years experience in the industry. Today, LogiGear leads pioneer corporations in both software testing and also in developing software testing programs in universities in America. In 2005, Mr. Hung Nguyen returned to establish LogiGear Vietnam for outsourcing automation software testing to the USA, Europe and Asia.
In the last consecutive three years, Ho Chi Minh City has been ranked among the top global software testing cities by Global Services Media, a global information gate to IT outsourcing. In November, 2009, the report by Tholons, a US market research company, has ranked Vietnam ninth out of the Top 10 global outsourcing nations and Ho Chi Minh City as fifth out of the Top 50 Global Emerging Outsourcing Cities.
With a long term potential, Mr. Hung sees last year’s obstacles differently. “I see last year’s challenges as an opportunity to upgrade our human resources -- resources that have been carefully trained from the beginning -- when investing in Vietnam,” said Hung.
2010 is the year that LogiGear would accelerate outsourced products to the Western region, focusing on developing automation software testing products and on collaborating with universities to provide professional software testing training in Ho Chi Minh City.
2010: CONFIDENCE IN HIGH TECHNOLOGY
About 3 years ago, when overseas Vietnamese entrepreneurs returned and invested in the country, we often heard complaints about burdensome administrative procedures and red tape by the local authorities. However, the investors currently do not mention this “old business” when we discuss investment activities by overseas Vietnamese in Ho Chi Minh City.
More than 3 years ago, I met Dr. Cao Huu Tri, a professor at California University, USA, who returned and applied for a license to open a specialized training school in the HCMC High Technology Zone for current graduates. At that time, he refused to talk about the project and often joked that “[a] few months later, when we receive the license, we can talk about this project.”
However, the few months Dr. Tri had predicted actually became 3 months, with more flights and returns between the USA and Vietnam. There were times when, faced with requests on procedures, he intended to quit. In the end, he has shared, though,” I will not quit until I reach the very end.”
Today, Dr. Tri has opened the Institute of High Technology Saigon in California, USA. The Center was licensed in August, 2009. The Center leased 1,000 m2 in the HCMC High Technology Zone (District 09) on January 11th, 2010. It has been one of the ground-breaking projects in the HCMC High Technology Zone this New Year. The overall project investment is up to about $2 million USD and we will start recruiting this year, Dr. Tri said.
Addressing the investment tendencies of overseas Vietnamese, Dr. Tri has commented, “[I]t is not by accident that Intel has chosen and invested $1 billion USD in Vietnam to build a chip manufacturing factory. The giant IT corporations target the stable and high-aspiration markets. And Vietnam is a significant prospect.” Dr. Tri also shared that Chinese universities have invited him to give lectures; however, delivering lectures and communicating experiences and knowledge to Vietnamese students are his true passions. This is one of the reasons that motivated him to collaborate with Vietnamese friends to implement the project.
Reviewing the investment status by overseas Vietnamese in the past years, Mr. Do Minh, an American- – Vietnamese with more than 10 years of experience doing business in Vietnam, comments: “3 sectors that the overseas Vietnamese have invested in are high technology, high technology health care, and education. They long to bring in high technology at reasonable prices, dubbed as ‘cheap, nice, long-lasting’ technology, to develop the country. It is their mission.”
Returning for business in Vietnam in 1992, Mr. Minh introduced American technologies into Vietnam. This included fire prevention and automatic fire extinguisher systems to Vietnam for the Metropolitan Building (District 1, HCMC) in 1995, American-made PS technology generators for the machinery industry serving the agriculture and fisheries industries in 1993, and an American-style popcorn machine in 1995.
“I have one friend who has come back and opened 26 computer schools, inviting American professors to teach under American standards. It’s the overseas Vietnamese doing this,” Mr. Minh said. He has also consulted on many investment projects in the heavy industries such as refineries, thermoelectric plants, microbiology fertilizer manufacturing, etc., in the Northern and Central region. Further, he helped provide capital and seeds to the farmers of Binh Thuan, Dong Nai and Lam Dong to grow 20 hectares of chili peppers last year that will be ready to harvest early this year. Each hectare is, on average, supported by VND 15 million. Doing business means dealing with obstacles wherever they are and “there is nothing to complain about as soon as the determination to invest in the homeland is there,” he said.
“If I had kept complaining, I would not have had over 15 years of successful business in Vietnam,” said Mr. Nguyen Ngoc My, an Australian-Vietnamese who is Chairman of Hong Lam Group, Chairman of Overseas Vietnamese Entrepreneur Club, and a successful investor in the entertainment industry in Vietnam over the past 15 years. Last year, Hong Lam Vocational School in Ba Ria – Vung Tau graduated its first class. 58 of these students have traveled to and worked in Australia.
One impressive point of the Overseas Vietnamese investment in 2009 is that the amount of money that they brought to Viet Nam decreased 12.8% compared to 2008. However, a lot of Overseas Vietnamese say that the reduction of that amount of money doesn’t prove that their investment is also declining. “The important thing that they can bring back to Viet Nam is knowledge and experience, not just capital” both Mr. Minh and Mr. My said.
Mr. Tran Hoa Phuong, Deputy Chairman of the Overseas Vietnamese Committee in HCMC says that it’s easy to understand that the decline of the US economy will lessen the amount of money that Overseas Vietnamese bring back to Viet Nam; however it cannot say that the investment demand of Overseas Vietnamese is also decreasing. Mr. Phuong says that the committee receives a lot of requests to research investment information and establish businesses. Moreover, real estate investment through relatives is substantial, though it cannot be computed.
In addition to Mr. Phuong’s words, an interview with Overseas Vietnamese Enterprise in the 1st Overseas Vietnamese Business Man Conference held last November in Ha Noi proves that Overseas Vietnamese are ready to invest $41 million USD in Viet Nam. People will invest 95% of this sum in real estate through their relatives. Although this is not official research it was collected at a goodwill conference (a convention of overseas Vietnamese entrepreneurs); therefore, it can be said that the investment capital of Overseas Vietnamese through their relatives is considerable.
Further, some other significant trends are not so easily computed. After some field trips to Overseas Vietnamese’ investment projects in HCMC, Mr. Phuong, Overseas Vietnamese in HCMC Committee, said that although the million-dollar projects are few, the important thing is that they are the intermediates that encourage foreigners to invest in large scale projects.
The hundred of millions of USD capital invested in the Phu My Bridge is an example. Dr. Nguyen Thanh Thai, Overseas Vietnamese from France and General Director of BOT joint stock Company, is the owner of the Phu My bridge project. However, his capital investment in this project is approximately 10 million USD; the rest is foreigner investment. NCDT.
* Figures:
In 2009, more than 3,000 Overseas Vietnamese Enterprises invested approximately 2 billion USD; 60% of which has proven effective (Source: Ministry of Planning and Investment)
In 2009, the amount of money Overseas Vietnamese bring back to Viet Nam is 6.283 billion USD, a reduction of 12.8% compared to 2008. Mr. Duong Van Thanh, President of Overseas Vietnamese Enterprise Association in Canada, says “The potential investment of Overseas Vietnamese is very large, because a lot of them possess 500,000 to 1 million and they would like to live in and invest in Viet Nam.
Mr. Pham Thieu Hoa, General Secretary of Overseas Vietnamese Interpreters Association, predicted that investment of Overseas Vietnamese will be increased in 2010. Among that, 60%-70% investment will be in real estate.
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