Not easy to woo investors in the past

Signage of Sembcorp Marine.
Signage of Sembcorp Marine. PHOTO: SEMBCORP MARINE

Vietnam may be the South-east Asian darling of foreign investors at the moment with its growing middle class and strong economic growth, but it was not always easy to sell the country as a destination for investment.

Sembcorp Development chief executive Kelvin Teo told The Straits Times that the first Vietnam Singapore Industrial Park (VSIP) in Binh Duong province was set up in 1996, just before the 1997 Asian financial crisis.

"Most foreign investors in the region pulled out and cut their losses, but Sembcorp was committed," he said. "During the crisis, it was very challenging. We could not go out to get investors, so in those two, three years, we set up processes, trained people and improved our infrastructure."

After that, Sembcorp played the role of a "mini Jurong Town Corporation, Economic Development Board and Public Utilities Board" for Vietnam, Mr Teo said, as the company sent its investment promotion team to the United States and Japan to seek investors.

Sembcorp's efforts paid off handsomely. When Vietnam joined the World Trade Organisation in 2007, it enjoyed first- mover advantage as the only sizeable industrial park.

While it took 10 years for the first park to take off, the VSIP venture expanded rapidly in the next decade. It built six more parks, which enjoy strong tenancy rates.

More are in the pipeline, Mr Teo said, adding that the Vietnamese authorities approach the company regularly to request a new park.

He added that despite the global economic uncertainty, they have not seen a slowdown in investor inquiries.

While Sembcorp runs industrial parks in China and Indonesia, he said many investors favour Vietnam because of its many free trade agreements.

Vietnam stands to gain much from the Trans-Pacific Partnership (TPP), which may not be ratified by the United States. But Mr Teo said that the "TPP is only one free trade agreement", and that the Vietnamese government will think of resourceful solutions.

He added that the Vietnamese government is looking for higher value-added manufacturing activity such as in precision engineering, pharmaceuticals and medical devices, and that Sembcorp is exploring how to attract higher value-added manufacturers to Vietnam.

Lee Xin En

A version of this article appeared in the print edition of The Straits Times on September 15, 2016, with the headline 'Not easy to woo investors in the past'. Print Edition | Subscribe