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Danang under the microscope   2009-03-28 - VietNamNet/VIR

Danang is looking to develop a hi-tech industry to promote economic growth.


More and more investors are focussing their attention on Danang

China and Vietnam are the first places of choice for an intensive-labour user like electric motors producer Mabuchi Motor. China used to account for a much larger share of the Japanese firm’s production capacity. However, like a handful of other Japanese producers who are diversifying their investment portfolios beyond China, Mabuchi Motor is increasing its investment in factories in Vietnam.


Before 2006, China accounted for 80 per cent of the company’s product volume and the remainder came from a factory in Bien Hoa city in southern Vietnam. However, Mabuchi Motor wanted to reduce the ratio of its made-in-China products to 60 per cent and raise Vietnamese factories’ contribution to its production capacity to 40 per cent. It found there was no better place like Danang to establish another factory.


“With a large population of around 900,000 people with not many production factories we thought Danang people had to move somewhere else to work. After surveys we found that factories in southern and northern Vietnam all had workers coming from central Vietnam. So, if we set up a factory in Danang, these workers might come back to work in their homeland,” said Hideo Hosoya, general director of Mabuchi Motor Danang.


By the end of last month the company employed 3,700 workers and despite the world economic recession which was slowing demand for its products, Mabuchi Motor is still investing more, spending around $65 million on its Danang factory by the end of March and planning to raise investment by another $15-20 million. When new production lines come into operation the company will employ 6,000-7,000 workers in total.


Mabuchi Motor’s business is what Danang wants to boost its economic development. Among 147 foreign-invested projects with total registered capital of $2.4 billion by the end of last year, more than 72 per cent were involved in real estate with a meagre 18 per cent in industrial production and information technology.


“Obviously, along with developing the tourism industry, Danang needs to strongly promote foreign investment into industrial production in order to boost economic development,” said Dam Quang Tuan, chairman of Danang Investors and Developers Association.


But, Danang does not want to develop industrial production at any cost. Tourism is a “goose” that will “lay the golden eggs” for the local economy and while the authorities want to boost industrial production it does not want to kill the “goose”. Although the authorities are eager to entice investors, they have turned down industrial projects that may cause environment pollution.


The city is now setting sights on luring hi-tech companies to set up factories, a move that Tuan said would be “very helpful” to local economy.

“Attracting hi-tech industries is a good policy and in line with the future development trend of the city, which will be environmental-friendly and support other non-smoke industries such as tourism, trade and finance,” said Tuan.


“Danang is the gateway of the East-West Corridor and goods produced in the city can be exported to other countries through its deep sea port and airport. This will help attract hi-tech companies to establish factories in Danang,” Tuan added.


The city will release a plan to develop a hi-tech industrial park during an investment promotion conference on March 27 at the luxurious Furama Resort. The park will cover more than 1,440 hectares and become home to hi-tech production, research and development, logistics, residential and office areas and supporting industries.


“We are still considering a suitable model for this park. But we will not build what is similar to Hoa Lac Hi-tech Park in Hanoi or Saigon Hi-tech Park in Ho Chi Minh City as if we do so we will not be able to compete with the other two,” said Lam Quang Minh, director of Danang Investment Promotion Centre.

“The park will not be confined just to hi-tech research and development or information technology. We want to attract all companies that use high technologies in industrial, agricultural or even pharmaceutical production,” said Minh.


He added that the proposal for the park would first release for investors, officials and scientists for consideration and the authorities would gather all opinion to work out the most suitable model. Minh said it was now time to consider such as park in Danang as it would take years to become a reality and the city would become a good place for such a park.


“In recent years Danang has made a lot of efforts in improving its infrastructure such as transport, water and electricity systems. The infrastructure will be much further improved as the city is investing more in this field. Particularly Danang international airport is being upgraded to be able receive four million passengers a year. That all will lay good foundation for develop a hi-tech industrial park in the city,” said Minh.


However, Minh is aware of many challenges ahead to develop such a park and one critical issue is how human resources will be trained to work for this proposed park. “Once we have make public the plan for the hi-tech industrial park, all universities and colleges in Danang will know and they will adjust their training programs to train for the development of the park,” said Minh.


Hosoya said Danang had four big universities that have produced and trained a good labour force. “These graduates will have to go somewhere else to work if there not enough factories in Danang,” he said. Local people are eager to learn to work in an international environment, as seen in demand for English training, according to Andrea Flew, director of Danang Language Institute, which is providing English training courses to local officials, corporate executives and students.


“Last year, we enrolled 717 students and we aim to attract 3,000 this year,” said Flew. There’s no doubt industrial parks are in need of English-speaking staff. Yet, English is not enough to develop hi-tech industries. There remains much for Danang authorities to do in order to build a firm foundation for a hi-tech industrial park.

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