Foreign investors make bigger Vietnam plan

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Despite uncertainties about inflation and the dong, many foreign investors have set their sights, once again, on Vietnam.

Last week, PepsiCo, the world's second-largest food and beverage business, announced a plan to build a state-of-the-art beverage production plant in the Vietnam-Singapore Integrated Township and Industrial Park in Bac Ninh Province.

The giant said the US$73 million plant represents the first leg of a $250 million investment program that the company is planning to undertake over the course of the next three years in Vietnam.

The project will elevate the company's total investment in the country to more than $500 million since its products first arrived here in 1994.

The new facility will be PepsiCo's fifth and largest production plant in Vietnam as well as the first company-owned production facility in the northern part of the country.

The rest of the investment will be allocated to a variety of projects, including increasing manufacturing capacity, marketplace equipment like coolers, strengthening existing brands and broadening its portfolio via health and wellness product initiatives.

European firms were also optimistic, according to Alain Cany, Chairman of the European Chamber of Commerce in Vietnam.

Cany said European firms operating in Vietnam expressed an overall confidence in the country in a third-quarter survey of over 200 Europe-based businesses including Shell, HSBC and Siemens.

The chairman told Thanh Nien Weekly on the sidelines of the survey's announcement last week that the respondents' turnovers represent 10 percent of Vietnam's gross domestic product.

Cany said the board was surprised by the high levels of confidence expressed by the respondents.

Most of the businessmen listed their outlook and investment plans for 2011 as "good" or "excellent." Sixteen percent expressed a neutral view and 12 percent reported a negative forecast.

The chamber's Executive Board member, Peter Born, said the vast majority of respondents planned to increase their investment and recruitment next year.

Born, also deputy president of German-based Commerzbank in Vietnam said 45 and 23 percent of those surveyed planned to increase investments in Vietnam by "a little bit" and "significantly," respectively, while 18 percent said they planned to maintain their current level of investment.

Half of the European respondents described plans to increase their recruitment by 20 percent or more in the coming year, according to Born.

"˜Cheap' opportunities

Don Lam, CEO of fund management firm VinaCapital, said foreign indirect investors have turned back to Vietnam following the nation's recovery from the economic downturn.

Lam said that the firm held an investor conference last week, which attracted many banks and financial institutions from Europe and Asia. The investors were very interested in the market, he said.

Vietnam's cheap opportunities in the securities market have attracted a lot of attention, according to Andy Ho, head of VinaCapital's investment division.

Andy said the VN-Index dropped approximately 30 percent in the past 12 months while Asian and ASEAN stock markets have had stellar run-ups to 30 percent in the period.

Vietnam offers investors "great buys" in the fourth quarter of this year as prices are low and economic potential remains strong, Ho said.

VinaCapital manages about $1.8 billion distributed into four foreign funds, of which three are listed on the London stock exchange. The funds have invested in listed and unlisted stocks, private businesses and real estate projects.

Lam said the firm was establishing two new funds with a combined foreign investment of $400 to $600 million in the next three years.

The funds will be channeled toward manufacturing ventures in consumer goods sectors, healthcare, and aquaculture, in addition to mid-tier residential and retail shopping facilities.

Forex concerns

What foreign investors worry about most is inflation, forex and Vietnam's low income levels, said Lam.

He said investors are eager to know what the government plans to do to stabilize its currency.

Andy said the dong depreciated by 5.5 to 5.6 percent this year, spurring high inflation. However, he said, the depreciation is not a big issue.

Most European firms in the chamber's survey expected about 5 to 10 percent depreciation of the Vietnamese dong against the Euro and dollar while 89 percent of the firms expected inflation in Vietnam to reach 10-15 percent next year, according to the chamber.

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