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Private Enterprises To Form Backbone Of Vietnam’s Global Growth

Private Enterprises To Form Backbone Of Vietnam’s Global Growth

According to Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), private conglomerates hold the key to Vietnam’s successful global integration and they currently account for 40 percent of the GDP and employ a major proportion of the workforce. And he believes that these players would ultimately  hold a flagship role in the economy and be the pioneers in the Fourth Industrial Revolution.

In fact, since 2018, investments from private conglomerates have prospered and this can be seen in the case of Vingroup and its investments in automobile and supporting industries and the Truong Hai Auto Corporation and its investments in the automobile and spare parts sector. Additionally, through the economic movement that private conglomerates generate, positive spillover effects for small and medium enterprises can be witnessed and this in turn creates a positive impact on the local economy.

According to Loc, although nearly 98 percent of Vietnamese enterprises are of small and medium size, but it is through the creative application of technologies and adoption of e-commerce that these companies are able to contribute to Vietnam’s trade turnover of USD 450 billion. And moving forward, it is important for there to be a stronger development between the country’s large conglomerates and small and medium enterprises through measures such as administrative reforms, regulatory changes and enforcement of legal rights.

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Hanoi Striving To Become New Location For Iphone Production

Hanoi Striving To Become New Location For Iphone Production

According to Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), Nguyen Duc Chung, Chairman of Hanoi People’s Committee is currently in discussion with Chinese corporations with the intention of diverting the entire iPhone production line to Hanoi. This is in view that the ongoing trade war has pushed investors from China to Vietnam in order to escape rising tariffs, with Hanoi rising up as the top location for investors as well as a potential production headquarters for global corporations.

Loc has also further elaborated that reasons for Hanoi being an ideal destination includes the positive impacts that the region has gained from administrative reforms, favourable weather conditions and its proximity to the Chinese market.

However, in order to feed rising demands, Hanoi has to continue improving its business environment, especially for the high-technology sector. According to Nguyen Dinh Cung, Director of the Central Institute for Economic Management (CIEM), this includes adopting a more proactive approach in attracting capital flows, speeding up administrative processes as well as utilising its advantages as a regional economic hub to create spill over effects to other provinces

According to Hanoi’s mayor, FDI is an important source of capital for social investment and it attributes to an average of 10 to 15 percent of the total social investment in the region. This has allowed FDI alone to contribute to the city’s high GRDP growth over the past few years which averages at 7.11 percent annually.

Among the 59 cities and provinces that has received foreign investment, Hanoi has also attracted the largest amount of registered capital with US$6.15 billion in the first ten months of 2018. This is equivalent to 22 percent of total investment. Ho Chi Minh City follows behind with US$4.6 billion or 16.5 percent of the total investment, and Ba Ria – Vung Tau with US$2.4 billion, accounting for 8.8 percent of total investment.

The highest grossing projects in the first ten months of 2018 include the smart city project in Dong Anh district, Hanoi with total investment capital worth US$4.138 billion and the US$600 million Lotte Mall Hanoi project that encompasses a hotel, apartment, office, and trade centre complex.

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