Although the culturally Vietnam and Bangladesh are two different country; however they possess somewhat similar value system with respect to education, industrilization and economic development.
Economy:
According to CIA world fact book estimate Bangladesh has per capita GDP $2300 (https://www.cia.gov/library/publications/the-world-factbook/geos/bg.html) and growth rate 6.6% compare to Vietnam which has $3100 and 8.2% accordingly with same inflation rate.
Education:
Vietnam, being a Confucian country, places a high importance on education. Vietnam has 22 million students. That's a quarter of the population, so at any given time, a quarter of the population is in class.
Bangladesh value education along that line and we have 18 million enroll in elementary schools, about a million appeared in HSC, SSC every year and at a given time there may be 20-30 million students in a class through out the education system.
Industry:
Vietnam has long been known as a low-cost manufacturer of Nike (NKE) sneakers, blouses for Liz Claiborne (LIZ), and wooden furniture, not to mention its huge exports of coffee, catfish, and rice.
For more than two decades, Bangladesh has been exporting readymade garments (RMG) to Europe and USA for customers like Walmart (George), Target, JC Panney, last year’s world cup soccer’s outfit and merchandise for mega-store IKEA.
Thursday, August 9, 2007
Prospect: Intel Corporation in Bangladesh – What can we learn from Vietnam?
If you are a policy maker for the future direction of Bangladesh, you might want to look at the following five facts:
Starting a tiny sales office during 1997, Intel Corporation becomes the biggest foreign direct investor with 1 Billion USD in Vietnam in 2006.
Employee growth exploded from few sales and support to a staggering ~4000 heads of high paying skill jobs.
Intel Corporation directly investing to the local companies and incubators as well as the stock market.
Partnering with NGO’s and Government to improve education sector and helping PC ownership.
Indirectly bringing many more business as upstream and downstream partners and suppliers and customers are coming.
Intel Corporation entered the Vietnam market in 1997. Initial engagement was a sales office staffed by few employees and few thousand USD. Now in Vietnam Intel has Assembly and Test facility which will employ 4000 employee by 2009. Feb. 28, 2006 – Intel Corporation announced it will invest $300 million (US) to build a semiconductor assembly and test facility in Ho Chi Minh City. However, Nov. 10, 2006 – Intel Corporation raise its investment from the USD$300 million to USD$1 billion. The investment growth is phenomenon.
"Intel has enjoyed a strong, constructive working relationship with the Vietnam government, both at the local and national levels," said Rick Howarth, general manager of Intel Products Vietnam. "We were very pleased that the discussions with the local authorities went smoothly so we could significantly expand the facility's size." The size increased from 150,000 square feet to 500,000 square feet.
For its part, the government of Vietnam is offering Intel incentives to locate there, including the promise of inexpensive electrical power and upgraded local transportation networks to get the plant's thousands of workers to and from their job. The result will be a highly cost-effective facility for Intel.
Intel’s investment triggered a domino effect of FDI. "The real 'Intel effect' is starting to occur," says Henry Nguyen, managing partner at IDG Ventures Vietnam. "Upstream and downstream partners and suppliers and customers it needs are coming."
"In February 2006, Canon, Inc. announced it was spending $110 million on an ink jet printer factory near Hanoi," Business Week reported. "Nidec Corp of Japan plans to build two plants to make electronic components, at a total cost of $940 million. Fujitsu Ltd. has invested $200 million and employs 3,200 people making circuit boards for PCs and phones. Virginia-based utility AES Corp. is negotiating to build a 1,000-megawatt power plant in the northern province of Quang Ninh that could cost as much as $1 billion. And Cisco System, Nortel Networks and Motorola are installing telecom equipment."
Foxconn of Taiwan, also known as Hon Hai, the world's largest contract manufacturer -- with clients like Hewlett Packard (HP), Dell [DELL], and Apple [AAPL] -- has applied for a license to invest up to $5 billion. It plans to manufacture electronics and computer products including digital cameras, personal computer printed circuit motherboards, and music players. Compal Electronics has unveiled plans to invest $500 million to build notebook PCs in Vietnam. It also plans to expand into LCD TVs, said Chairman Rock Hsu Sheng-Hsiung at an annual shareholders meeting in June. Compal is expected to receive its investment license this month.
A June report by industry research group iSuppli predicts that contract manufacturing in Vietnam will grow more than 100% annually between 2006 and 2011. The sector is expected to explode from $36 million in 2006 to as much as $1.8 billion by 2011 as more major manufacturers move in, making it the fastest-growing sector in the area. The most recent example of this trend is Jabil Circuit (JBL) of St. Petersburg, Fla., which in June began operations at its facility in Saigon Hi-Tech Park in Ho Chi Minh City, where it makes laser printers for HP. Jabil plans to spend up to $100 million on its operations in Vietnam, which is increasingly seen as an alternative to China.
At the end of July 2007 South Korea’s direct investment in Vietnam reached 10.33 billion dollars, according to the Korea Trade-Investment Promotion Agency. Singapore was second with 9.69 billion dollars, followed by Taiwan with 9.1 billion dollars.
If you follow the domino effect above, you will notice that starting from microprocessor packaging, motherboard, components, system, display, accessories all upstream and downstream partners are coming to the proximity to work collectively which will deliver a highly cost effective profitable product. That is globalization at work fueled by capitalism.
To summarize, with in a decade starting from a tiny investment Intel Corporation become the biggest foreign direct investor with 1 Billion USD in Vietnam in 2006. Employing talented citizens locally and indirectly bringing enormous amount of foreign direct investment which employing even more.
During Intel CEO Craig Barrett's visit to Vietnam in August 2002, he challenged the country to "awaken the sleeping dragon" by increasing technical literacy in its young population. In my opinion Vietnam beat that challenge by setting up an investment friendly atmosphere which attracts this outstanding investment of Intel Corporation. In my heart I have no doubt that Chairman Craig Barrett will through similar challenge to the Bengal tigers if he visits Bangladesh near future.
Disclaimer: This document is prepared from published data from Business Week, isuppli, http://www.intel.com/, http://www.thanhniennews.com/, and other public sources. The opinion expressed here are authors own, not Intel Corporation’s or any others.
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