Made in Việt Nam: Should Samsung be treated as a local company?

On the sidelines of a conference at the end of July, Samsung Việt Nam CEO Myoung-Sup Han told the press that his company hopes to be treated as a local business soon, instead of a foreign investor.

He said every year Samsung makes huge contributions to Việt Nam’s export revenues, and creates jobs for hundreds of thousands of Vietnamese, and that all its products are labeled as “made in Việt Nam.”

Han’s statement, despite raising a few eyebrows, did not cause any strong controversy, until recently.

During a press conference to promote Vietnamese goods last Wednesday, Võ Văn Quyền, who is in charge of domestic market issues at the Ministry of Industry and Trade, seemed to support Han’s view.

Quyền said products made by Samsung, or any other foreign companies inViệt Nam, can be categorized as Vietnamese products.

Many local businesses and economists simply do not like that idea.

They say the electronics giant, which is now the biggest foreign investor in Việt Nam with a total capital of US$11.3 billion, wants to receive the same favorable treatment that the government has given to Vietnamese producers to encourage the consumption of locally made products.

Economist Nguyễn Văn Ngãi said foreign businesses operate in Việt Nam should not be considered Vietnamese companies, a common rule that he claimed can be seen in other countries.

Even though foreign investors do contribute to the local economy, through tax payment and job creation, they are not local companies and can leave anytime when they find the business environment no longer favorable, he said.

Some officials want to label goods produced by foreign companies as Vietnamese goods because they want to increase export statistics to “glorify their performance,” Ngãi said.

He warned that such mislabeling will affect how policies are made, leading to unhealthy competition between local and foreign businesses.

Vũ Kim Hạnh, chairwoman of the Association of Vietnamese High Quality Goods, agreed, saying that many Vietnamese businesses are small and need state support, while foreign investors do not.

If all companies are treated the same and given similar incentives, local small enterprises will end up dead, she said.

Trịnh Thành Nhơn, CEO of International Cosmetic Company, said foreign businesses have already been offered enough tax incentives, so they should not ask for more.

His company makes household goods such as laundry detergent and toothpaste and has been facing a tough competition from giants, notably P&G and Unilever.

Exports by foreign-owned companies hit $85.2 billion in the January-September period, up 15.8 percent, accounting for 70.6 percent of Vietnam’s total exports, the General Statistics Office reported.

A total of $17.16 billion was registered for both existing and newly-licensed foreign projects in the first nine months, up 53.4 percent from the period last year, it said.

Estimates vary but economists believe the foreign sector is now responsible for around half of the country’s gross domestic product.

GraphicThis graphic from a report released by the Asian Development Bank in September shows the sources of Vietnamese exports, with data collected from the General Statistics Office

Broken promises

Economist Nguyễn Minh Phong said ever since Việt Nam first opened its economy for foreign investors 25 years ago, the participation of local suppliers in foreign investors’ value chain is “extremely limited.”

It is not right to call their products Vietnamese when almost all the materials and parts are imported, Phong said.

He urged the government to keep supporting local businesses so they can join the value chain of exports, saying it will also help develop Việt Nam’s production.

Local manufacturers ague that they have always tried to become suppliers for foreign companies, but it is never easy.

Nguyễn Đức Hồng, deputy general director of Thống Nhất Rubber Ltd.,Co., said it is “extremely difficult” for Vietnamese businesses to ink a deal with foreign investors.

He said his company has for years been a supplier for Skellerup and Molten, both spare part providers contracted by global automakers, but foreign car manufacturers in Việt Nam still refuse to buy directly from his company.

Hồng did not elaborate.

But his comment is in contradiction to what many foreign companies have suggested.

Foreign automakers in particular have complained about a lack of qualified suppliers in Việt Nam, which force them to pay more to imports parts and components from overseas.

samsungWorkers at a Samsung factory in the northern province of Bắc Ninh

‘Progressive’

Nguyễn Mai is one of very few economists who expressed their support for Samsung’s proposal, saying it will be “progressive” to redefine what makes a company local or foreign.

People should not be too concerned about distinguishing foreign businesses from local ones, considering the huge benefits foreign investors have brought to Việt Nam, such as 3.5 million jobs, he said.

Samsung alone is employing 130,000 Vietnamese workers and it reports annual export revenues of $30 billion, Mai said, stressing that Việt Nam should be proud that those quality products are made by Vietnamese.

Phạm Tất Thắng, a senior researcher at the Việt Nam Institute for Trade, said since the foreign is part of Việt Nam’s economy, their products are essentially Vietnamese.

Some refuse to take a stand in this debate.

Võ Trí Thanh, deputy chief of the Central Institute for Economic Management, said the government should think carefully about the concept of fairness in a global context.

Policies should not be about labeling, he said.

What’s important is how much a business can bring to the economy, Thanh said.

By NGUYỄN NGA – TRẦN TÂM

Source: Thanh Niên News

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