SOUTHEAST ASIA
Next Stops are Vietnam, Thailand
The 18-member Malaysian American Electronics Industry projects a growth in headcount of between 20 percent and 30 percent in business process outsourcing. At the IQPC Shared Services conference in Newport, Wales, in May 2005, Tim Whitrow, the Swindon, U.K.-based EMEA Accounting Manager for Intel Corp., described how the company decided in 2004 to go global with its shared services needs. With global employment of 85,000 and a full 40 percent of its $34 billion in revenues coming from the Asia Pacific, it figured that Asia might be a good choice for one of the company's two SSCs.
The site chosen was Penang, Malaysia, where Intel had first established manufacturijng in 1974. It's a familiar tune: A multinational brings new operations to places where it already feels comfortable with the operating environment — even if the operations in question are as disparate as semiconductor fabrication and accounts receivable reconciliation.
One thing that did not move to Penang was accounts payable. "We couldn't get the language capability," Whitrow said, countering BASF's conclusion in Kuala Lumpur. But Intel's confidence in Malaysia and other Southeast Asian countries has been backed in recent months by some other significant moves.
In December 2005, the company announced it would invest $230 million in a 2,000-job complex in Kulim, Malaysia, that will incorporate an assembly and test site as well as a design and development center. The expansion backs Intel's five factories across Malaysia. But the company illustrated a wider trend in January when it was announced that Intel was seeking permission from the Vietnam Planning and Investment Ministry to construct a $605-million plant in a high-tech zone in Ho Chi Minh City.
Indonesia Investment Coordinating Board |
Even as Vietnam struggles with accession to the World Trade Organization, Intel President and CEO Paul Otellini has expressed confidence in the country's operational climate and market: The country has seen personal computer ownership grow to 1.3 million from 288,000 in 2000.
Just how hot is the corporate investment environment in Vietnam? Hot enough to report a 2005 year-over-year industrial production value jump of 17.2 percent, led by the machine tool and automotive sectors. The northern province of Vinh Phuc led the country in industrial growth, followed by southern Binh Duong province.
The steel sector was hot enough to attract interest from wire company Tycoons Worldwide Group. Tycoons Group Enterprise is planning to invest $1 billion in a steel refining and rolling plant in the Dung Quat Industrial Zone in Quang Ngai province. The project's first stage is expected to be ready in 2009.
Another Asian multinational with projects in multiple southeast Asian countries is Japanese precision motor manufacturer Nidec Corp. In addition to expansions to plants in China and the Philippines, Nidec also is building new plants in Thailand and Vietnam, all in an effort to boost overall hard disk drive motor production volume by 33 percent (to 40 million units) by the end of 2006. The Thailand Board of Investment has recently introduced several new incentive programs targeted at pharmaceutical and electronics companies, in addition to lifting import duties on raw materials for suppliers serving the plastics, electronics and automotive industries.
Other projects recently launched in Vietnam include Japanese concern Canon's new $50-million laser printer factory in the 769-acre (311-hectare) Que Vo Industrial Zone in the northern province of Bac Ninh. The zone has welcomed 40 investors, 23 of whom are building factories, since being launched in 2002. The 50-acre (20-hectare) Canon complex, the world's largest laser printer factory, opened in December 2005, and is expected to employ more than 3,000 workers as it seeks to fill some 35 percent of world laser printer demand.
Among the largest projects is the $316-million investment from Vietnam Coal Corp. to build a heavy truck plant in the North Chu Lai Industrial Park in Quang Nam Province. The initial phase of the project will encompass multiple plants on a 297-acre (120-hectare) parcel, making vehicles based on Russian technology.
The plant is just one activity of the Vietnam National Coal and Mineral Industries Group, formed in November 2005. In addition to promoting the country's rapidly expanding coal industry, the group is involved in machinery repair and manufacturing, truck assembly, shipbuilding, electric power plants, industrial explosive materials, construction materials, shipping and even tourism. Its projected capital investment in various metals, mining and power plant projects in 2005 is $412 million.
