Binh Duong:

Economic Locomotive of Vietnam

by Christopher Runckel, President of Runckel & Associates
(Business-in-Asia.com)
Southern Key Economic Zone
Ho Chi Minh City
Binh Duong
Dong Nai
Ba Ria-Vung Tau
Binh Phuoc
Tay Ninh
Long An
SKEZ consisting of eight localities
Tien Giang
 Why SKEZ is Important?
Growth: made up nearly 40% of GDP, 75 % of the country's export
revenue, growing at a rate of 21.4 % per year, with 65 industrial
parks

Demographics: Binh Duong, Dong Nai and Binh Phuoc have

advantages in manufacturing; HCMC in services, IT and higher
value added areas.

Market: HCMC, once a pioneer in this field, is now lagging behind

Bing Duong, Dong Nai. Hanoi behind Vinh Phuc, Bac Ninh, Hai
Duong

Population: 15.2 mil. or 18% of Vietnam’s population

Government Policy: the zone’s master plan to 2020 calls for a
GDP growth rate 1.2-fold higher than the country’s GDP growth
in the 2006-10 period, and 1.1-fold higher in the 2011-20 period
 What our contacts and our
observations tell us about Asia?
Costs continue to increase in China -
government support for FDI decreasing
Quality Control continues a problem in
China
Systematic IP Infringement in China is still a
major problem
Thailand's political problem will not be
easily resolved
India - interesting, but too bureaucratic, too
weak infrastructure, plus issues with supply
chain
Vietnam - has issues but the best value and
good forward potential - Japan has moved
from Thailand to Vietnam as its anchor in
SE Asia
 What our contacts and our
observations tell us about Asia?
The 2008 survey of Japanese External Trade
Organization (JETRO) indicated FDI capital in Vietnam
between January and December, 2008 showed an
increase of 42.3% over the previous year
As many as 92.6% of Japanese manufacturers and 88
% of Japanese non-manufacturers surveyed in Vietnam
planned for expansion. These are the highest ratios in
the Southeast Asian regions according to JETRO.
The Japan Bank for International Cooperation also
ranked Vietnam the third most attractive investment
destination for Japanese investors for three consecutive
years, after China and India. According to the bank, the
"five top reasons" of Vietnam being a promising
prospect are inexpensive labor costs, market growth
potential, risk diversification, excellent human resources
and supply base for assemblers.
 What our contacts and our
observations tell us about Asia?
Asian investors still have the most total registered
foreign investments in Vietnam, led by Taiwan and
South Korea.
The United States is the 7th largest direct investor in
Vietnam overall. U.S investment has concentrated on
the service sector especially the hotel and tourism
industry, such as Cua Dai Beach Resort Starbay
Holding Group based in the U.S. and 5-Star Tourism
Complex by the American group Good Choice in Ba Ria-
Vung Tau Province. Other than that are Intel and most
recently on Sept 4, 2009 Coca-Cola announced it would
double its investment in Vietnam by adding US$200
million in the next 3 years (over the past 15 years, Coca-
Cola has invested US$200 million in 3 factories in
Vietnam)
Vietnam's continuing challenges
Infrastructure remains a problem
Cost of land in HCMC and Hanoi have become
too high
Supply chain gradually improving, but still
limited
Ports can't match China or Thailand
Inflation remains a concern to potential
investors
Worker turn-over rate and access to higher
training a concern
Corruption/transparency need improvement
What Central Gov't & Binh Duong
are doing to address these?
Infrastructure - central government doing much but BD doing
more - examples new Highway, Univ, Hosp, New City
Cost of land - Binh Duong's land cost remains low and firm soil
make BD even better value
Supply chain - government increasing incentives to help attract
supply chain companies - strong new Vietnam/Japan
relationship attracting good supply companies. Locations like
BD gaining a critical mass of these companies and working to
attract more
Port - Central government now realizes investment should be
more focussed.
Worker turn-over rate/training - Government increasing focus on
education. BD's focus on creating sustainable community,
creation of University and Hospital limit issue.
 About Binh Duong
GDP: growth rate of 14.8%
Location: at the heart of the
SKEZ; only 30 km from
HCMC and rich in mineral
resouces
Investments: the province
has 28 operational industrial
parks. Much of Binh Duong's
success is attributed to close
proximity to majoy markets, relatively well developed
experienced and consistent infrastructure and localized
economic leadership, incentive packages for investors
 About Binh Duong
• Supported Government Policy: under the country's master
development plan, Binh Duong Province is expected to have 31
industrial parks by 2020 with a combined area of 8,360 hectares
and 23 industrial clusters covering 2,704 hectares. Binh Duong
already has 28 industrial parks and 10,000 companies doing
business in the province.
• In the Provincial Competitiveness Index (PCI) ranking: a survey
of the business climate in Vietnam’s 64 provinces and cities -
Binh Duong was number one for 3 consecutive years. However,
last year BD lost the #1 slot to Danang with final scores differing
by less than half a point - BD mainly lost on Port/Airport and
Transparency which marked down Binh Duong's website and
display of information. Later being addressed now.
 About Binh Duong
• Despite difficulties resulting from global economic downturn, Binh
Duong attracted more than 2 billion USD in foreign direct
investment (FDI) this year, doubling its yearly target. In 2008, the
province’s performance regarding the disbursement of FDI
capital reached 64% – one of the country’s highest levels.
• The province has over 3,200 business investment. For foreign
investment, there are 16 new projects licensed this year with a
total investment of US$1.7 billion (including private projects in the
commercial area, housing and Phu Hung Long investment) and 5
additional projects with total capital increased by US$4.8 million
dollars. The industrial parks attracted US$ 499 million,
accounting for 22%.
• In addition to major foreign investors, including Taiwan , the
Republic of Korea and Japan , the province has seen a host of
newcomers, such as the Netherlands, Finland, Denmark, the US
and the UK.
 Why Binh Duong?
Binh Duong - a good location to reach throughout the SKEZ
and Nationally - new highway and new roads in province
improving this
• National Highway
System:
TPHCM-Can Tho
Giau Day-Da Lat
HCMC - Dau Day - Hanoi
• Regional Highway
System:
TPHCM - Moc Bai
TPHCM - Hoa Lu
Bien Hua - Vung Tau
TPHCM - Giau Day
• Ringroad System
 Why Binh Duong?
"Binh Duong, Inc." -
Binh Duong is the
province with a plan and
the ability to make it work
- leadership of province
has vision, vision is in
process - not just plans -
action, one stop shop,
not just economic but
social planning,
infrastructure among the
best in Vietnam and
improving,
More Than Just a Factory Location
Binh Duong new city is a
project conceived by the Binh
Duong provincial government
and the provinces leading
state-owned company,
Becamex IDC
Corporation. The project
involves a new provincial
capital with surrounding
industrial parks and factories
and integration of work
locations, housing and public
amenities, university, hospital,
etc. that is already taking shape
in the province.
 Next Steps

• Do your due diligence/research

• Compare regionally - if you do you will be
convinced Vietnam is a winner
• In Vietnam, compare the provinces and
compare the industrial parks
• Visit Binh Duong - meet with local officials
and high quality industrial park companies
like My Phuoc Industrial City
• Binh Duong is the place to be