Vietnam Shipbuilding Industry

Topics: Gross domestic product, Ship, Shipping Pages: 15 (4133 words) Published: June 5, 2013
am INVESTMENT
IN
VIETNAM SHIPBUILDING INDUSTRY

1. INTRODUCTION

Now-a-days to transport a finished goods or product via ship is very cheaper & convenient. As a result recently the industry of shipbuilding is flourished. So we want to make our FDI into a shipbuilding industry. To make a FDI we select Vietnam as our host country. Vietnam is rapidly emerging as a new center of economic growth in South-east Asia. Foreign investors seek business opportunities in both the domestic market of over 80 million potential consumers, and in low cost production sites. North American and European investors are in particular eyeing the domestic markets while investors from neighboring countries such as Taiwan are to a higher degree using Vietnam as an export base Vietnam’s young population – 95% are younger than 65 – is eager to explore Western consumer goods, and present a huge potential market for foreign investors. The high economic growth of the 1990’s, on average 7.3% annually, is expected to continue, suggesting an even larger market in the future. International integration, notably the membership in the ASEAN Free Trade Area (AFTA), and the anticipated membership in the WTO facilitate access to this attractive market. Vietnam is the country with the coastal line of 3,260 km in length, close to internationally important marine routes. Its weather and natural condition are profitable for the development of marine shipping and commerce. Among which, the marine system with the “key’ position plays important role in the developing of the shipping and marine services. Nowadays, Vietnam has 266 great and small quays in 24 provinces, in coastal regions, among which they are mainly small ports (picking up ships below 10.000 DWT) and there are some great ports which are capable of accepting great weight from 10,000 DWT to 40,000 DWT such as Cai Lan Port, Hai Phong Port, and Saigon Port. So, for these reason investment in VIETNAM on shipping industry is very profitable. Despite the high rate of growth, shipping capacity of Vietnam shipping is still considered lower compared with the potentiality and the marine economic profits. In 2005, Vietnam shipping ranked 60/150 among countries in the world and ranked 4/10 in the block of ASEAN. Vietnam average shipping age is 17 years of age, considerably high compared with the world average. The export-import shipping market-share of Vietnam has just reached about 13-15% during the recent years while world shipping occupies more than 80% of the share-market So as a manager of COSCO Line Multinational Company, we have decided to invest in Vietnam shipbuilding industry.

2. PEST ANALYIS

2.1. Political analysis

2.1.1. System of government

The full official name of Vietnam is Socialist Republic of Vietnam. By the name it proves that the rolling system of the Government is Socialism. The Vietnamese Communist Party (VCP) has a monopoly on power. A three-person collective leadership consists of the VCP general secretary, the prime minister, and the president. So, the system of government of Vietnam is Nominally Marxist Single-Party state.

2.1.2. Government policies

The Government of Vietnam has accorded a high importance to shipbuilding, and has been supporting the sector within the scope of its sector support program. This program provides considerable support to the sector (BLP 2005) including:

* Providing Vinashin with loans on advantageous terms.
* Allowing the corporation to retain total corporate income tax and capital-use tax for the period 2002 to 2010 for reinvestment. * Exemption on export taxes and land rent.
* Government covers up to 50% of working capital available to State Owned Enterprises (SOE). * The State Development Fund provides loans with 12 months payback and 2 year’s grace period for the infrastructure costs of new shipyard projects. * Restriction of second-hand ship imports....

References: Athukorala, P. (2006) ‘Trade Policy Reforms and the Structure of Protection in Vietnam’ World Economy (29(2), pp.161-187).
CIEM (2006) ‘Vietnam’s Economy in 2005’, Theory and Politics Publishing House, Hanoi
Dee, P. (2005) ‘Extending CGE modeling to the liberalization of services trade’, in Productivity Commission Quantitative Tools for Microeconomic Policy Analysis, Conference Proceedings, 17–18 November 2004, Canberra.
Fetzer, J
General Statistics Office. (2005) ‘Statistical Yearbook 2004’, Statistical Publishing House, Hanoi.
GTAP www.gtap.org
Kurzweil, M. (2002) 'The need for a 'Complete ' labor market in CGE modeling '. GTAP Working Paper, downloadable from www.gtap.org.
Productivity Commission (1998), Aspects of Structural Change in Australia, Research Report, AusInfo, Canberra, December
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