SOUTHEAST ASIA: VIETNAM REPORT
Foxconn, Taiwan’s leading electronics contract manufacturer, has received regulatory approval for its plan to invest $246 million in two new projects in Quang Ninh Province in northern Vietnam. The projects, to be carried out by a subsidiary of Foxconn Singapore, will focus on the manufacturing and assembly of telecommunications equipment and electric vehicle components.
This will bring Foxconn’s total investment in Vietnam to approximately $3 billion. Of the new investment, $200 million will be invested in a factory to produce EV chargers and components, which is expected to begin production in January 2025 and employ an estimated 1,200 workers.
Source: REUTERS Japan
PSR Analysis: As multinationals diversify their supply chains away from China, they are choosing Vietnam for its cost and location advantages, as well as its open and safe investment environment.
This trend began in the early 2010s but has recently accelerated due to China’s strict zero-corona policy, rising wages, and political conflicts with Western countries. As a result, Asian countries such as Thailand, Indonesia, Vietnam, and India are currently in fierce competition for FDI (Foreign Direct Investment).
Vietnam has an advantage over other countries in this competition because its operating costs are relatively low compared to other Asian countries and they are better than Myanmar and Cambodia.
Its location provides easy access to China and major maritime trade routes; it has a stable political situation among ASEAN countries and has signed many trade agreements.
In addition to Foxconn, Samsung, LG, Intel, and other companies have already established operations there, and the possibility of Vietnam becoming a manufacturing hub in Southeast Asia is attracting attention.
One concern is the stable supply of electricity. A shortage of electricity due to a sharp increase in demand for power will affect local manufacturing plants. PSR
*This information was provided by our friend Mr. John Tran who lives in Vietnam. We thank him for his dedication and cooperation.
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
