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.