Daewoo begins huge investment in Vietnam

Daewoo begins huge investment in Vietnam

HANOI (AFP): South Korea's Daewoo Business Group began work
yesterday on a vehicle assembly plant outside Hanoi in a further
step towards a planned US$1 billion of investment in Vietnam,
company officials said.

Daewoo chairman Kim Woo-Choong attended a ceremony to mark the
start of work on the plant, a joint venture with the Ministry of
Defense's General Administration for Technology and Economy.

Executives of the South Korean firm said it was planning up to
$1 billion of investment in Vietnam, where it currently has nine
joint ventures and two projects awaiting licensing worth a total
of $450 million.

Some $250 million has already been invested building up a
manufacturing base in home appliances and electronic components
in joint ventures with Vietnamese state firms.

Daewoo's auto-manufacturing joint venture VIDAMCO, in which it
holds a 65 percent stake, will assemble a full range of passenger
cars, buses and trucks at the $10-million plant, a company
official said.

Production is expected to reach 20,000 passenger cars and
1,000 commercial vehicles annually after the plant is completed
later this year. Total investment in the joint venture is $32
million.

While many firms have waited cautiously on the sidelines or
seen investment plans bogged down by Vietnam's perilous
bureaucracy, Daewoo's nine current projects have moved ahead
rapidly.

If Daewoo realizes its plans to invest $1 billion here it
would be the country's largest overseas investor, overtaking the
position held by Taiwan's Ching Fong Group, which has set up a
bank branch, a cement plant and two motorbike factories.

Flocking

After initially planning to limit to four the number of
foreign auto manufacturers allowed to set up here, Vietnam has
thrown open its doors as long as firms promise to help develop a
local components industry.

The new policy has seen manufacturers flocking to Vietnam,
eager to get in on the ground floor of market that is currently
tiny but is expected to expand 10-fold in the next five years.

Only two foreign-invested auto projects -- the South Korean-
backed Mekong Corp. and Vietnam Motors Corp. (VMC) from Japan and
the Philippines -- are currently producing vehicles from kits,
but the firms have seen only limited success.

Ford Motor Co. announced last month it was applying for a
license to build a factory between Hanoi and Haiphong to assemble
a wide range of vehicles. The U.S. firm has not announced a
figure for the planned investment.

Chrysler Corp. as well as Daimler Benz and Toyota Motor Co.
are in the queue for license approval for manufacturing plants,
even though current vehicle sales are only around 6,000 units a
year.

A $50-million joint venture between Mitsubishi and Proton of
Malaysia is being built in Song Be province outside Ho Chi Minh
City.

Peugeot and Nissan are considering schemes while German luxury
marque BMW has begun cooperating with VMC to build kits of its 3-
series cars outside Hanoi.