Difficult to have large investment in Vietnam, says President of Ford Asean

Talking to the press about the investment story of Ford in Vietnam, president of Ford Asean said Vietnam has many advantages in developing automobile industry. However, due to certain existing difficulties, it would be very hard to have large investments, equalling to the investments that Ford has been pouring into some markets in the same region.

Ford is one of the first international automobile groups to invest in Vietnam. This shows that Ford has soon foreseen the certain advantages of Vietnam. On the perspective of an investor, what do you think?

It is true that Vietnam has great advantages for the automobile industry development, such as the government’s desire to develop automobile industry into a leading economic sector, accompanied by a number of preferential policies. In addition, Vietnam also is very advantageous in terms of personnel, which has been clearly proven in Ford Vietnam after 15 years of presence.

Specifically, Vietnamese officials and workers at Ford are a very dedicated staff having been with the company for a long time. The very little changes in personnel matter of Ford in Vietnam has become an advantage.

Peter added that the Vietnamese staff of Ford regularly attends training courses to improve their skills during their work. Moreover, the low personnel quit and change rates, along with the high satisfaction with the company are the very good signs for Ford’s long-term investment in Vietnam.

However, the fact is that after 15 years, compared to other countries in the region, Ford has invested very little. Have you ever hoped that Ford would invest just half of the capital invested in other markets into Vietnam’s market?
Sorry we cannot do that.

I would like to say more about Ford’s investment in South East Asia.
You all might already have heard some information regarding Ford’s investment expansion in Thailand for a new plant. This is the first plant that Ford has 100 percent ownership. Previously, most investment activities of Ford were under the form of joint ventures with Mazda. Each investment decision of Ford is based on long-term investment perspective. We want our investments to promote long-term effects, being meaningful and bringing benefits to the locality as well as to the long-term business of the group.

I do not want to say much about Thailand here. You may know that Thailand is the main area for the production of Ford in Southeast Asia. The Thai government has issued policies to support the long-term production for export, as well as supported in infrastructure and supporting industries for a long time.

Returning to the issues of the Vietnam’s market, Ford has seen the potential and future of Ford in Vietnam. That is why we are here and invest. Currently, Ford’s plant in Vietnam is not operating at its full capacity. Therefore, we are looking forward to the opportunities to further expand the market and to longer-term development policies, clearer and longer-term strategies to develop the automobile industry in Vietnam, for Ford to have more investment opportunities.

Answering the question on whether Ford has any investment opportunities to produce the global products in Vietnam thereby export to other markets in the region, Peter said they have been seeking opportunities for export as well as investment of Ford in Vietnam.

Ford Transit can be an example. That product has been sold very well in Vietnam and the region. Vietnam is currently the only regional country assembling this product. Ford is working seriously the opportunities to export Transit from Vietnam to other Asean countries, in the conditions that the government’s policy encourages export and allows them to do that.

Regarding the kinds of supporting policies Ford is looking for, in order to export Transit and maybe other models in the future to other markets in the region, Peter said to export a model from one country to another in the region, first, they need low tariff barriers (export or import tax at zero percent or very low). The export requirement in Asean is to have a localisation rate of at least 40 percent. Ford hopes to receive government’ support through the policies that promote export, develop supporting industries and infrastructure for the production to obtain that localisation rate and the ability to support.

Does Ford have any plan to reduce cost prices of the products for export?

The prices of automobiles in Vietnam are currently much higher than the common price of other countries in the region.

There are two factors generating the cost price of a product, one of that is tax. In the production cost of automobiles in Vietnam, tax rate accounts for over 60 percent, whereas it is much lower in Thailand. The second issue is low output volume. If the scale of the market were too small, it would be very difficult to raise localisation ratio as well as expand the production.

Finally, would you please give some specific evaluation of the role of Vietnam in Ford’s development strategy in the region?
We attach great importance to the development of Ford in Vietnam’s market. We have invested and been in Vietnam for 15 years. We really hope Ford could use every opportunity here, expand the market share, and supply quality products to customers as well as seek for long-term investment opportunities. We could not achieve today’s success without enthusiastic supports from the authorities, Vietnamese government and our partners here.

The automobile industry of Vietnam has its own development characteristics, so I think it would be unfair to carry out comparisons with Thailand or any other specific country. We want to have long-term investment in Vietnam and we will continue seeking for development opportunities in the future. – Vneconomy

Tags: Ford Asean, Ford Vietnam