Training Workshop on Investment Promotion and Facilitation for Viet Nam

1. Training Workshop onInvestment Promotion and Facilitation for Viet Nam Group Exercise Materials Dong Nai Presented by Asia Policy Research Co., Ltd. peterb@loxinfo.co.th ; david@asiapolicyresearch.com 2003

2. Summary of Group Exercises Module 2: Site Selection What motivates FDI? Prioritization of site selection factors Real site location case study � questions and answers Module 3: Image Building Setting goals for image building Developing a press release and plan Module 4: Promotion Materials Preparing a fact sheet Module 5: Promotion Techniques Developing a marketing plan Module 6: Investor Targeting Developing a targeted investment strategy Module 7: Facilitation Investment promotion role playing Module 8: Monitoring Developing a retention strategy

3. Module 2: Site SelectionOpen Exercise: What Motivates FDI in Southern Viet Nam?

4. Indicative Answers Firm level variables Access to suppliers Staying ahead of competitors Low production cost Access to raw materials and labour Market access Law/regulations Host country variables Political Economical Stability Favourable FDI policies Streamlined procedures Trainable labour Good supplier network Infrastructure

6. Exercise: Case Study from Thailand - Investor Profile US$ 30 million North American company Revenues growing at > 20% a year Produces specialty metal products (on proprietary machinery) Only existing production facility is in East Asian country Plan to establish an operation in ASEAN to produce a new range of products

7. Exercise: Case Study from Thailand - Investor Profile Markets for the company�s products are in high-tech consumer electronics Good customer base in Thailand Pioneer industry (no in-country competitors) Key project characteristics 160 million baht total investment 80% export, mainly to Asian countries 100% foreign ownership

8. Open Discussion: Case Study from Thailand Investor Profile Questions What additional company information would be useful to know? How desirable does this prospective investor appear to be? Why?

9. Exercise: Case Study from Thailand - Site Selection Criteria Country Location of main customers Avoidance of local competition Ease of doing business �Feel good� factor Facility requirements land size building utilities special equipment lease cost Location Stability of investment location Minimal change Minimal pressure on infrastructure Ability to recruit and retain skilled labour Stable operating costs Minimization of investment costs �Big fish� in chosen location

10. Exercise: Case Study from Thailand - Site Selection Criteria Location Availability of factory for lease Ability to �fast-track� operations Reasonably comfortable expat living environment Availability, stability and cost of power Availability of Argon gas (raw material) Availability, cost and retention of labour BoI incentives and tax environment Location Ease of importing and exporting Intellectual property protection Adequate physical infrastructure �Presentability� of factory and premises to customers Showroom facilities available Low start-up and operating costs

11. Group Exercise: Site Selection Criteria Questions How would you go about gathering information to address the prospective investor�s concerns? How would you customize this information specifically for this company? Breakout Groups meet to discuss this matter (for around 45 minutes), plan a strategy to meet the company�s information needs, and then report back to plenary.

12. Case Study: The Actual Story Selecting the Country Company made contacts through bankers Referred in Thailand to consulting firm specializing in site location CEO allowed two weeks to make country selection decision visited industrial estates in ESB and Chiang Mai (latter with BOI assistance) followed by Subic Bay industrial park in the Philippines

13. Case Study: The Actual Story Selecting the Country Country selection based mainly on �feel good� factors: satisfaction with Lamphun Industrial Estate and Chiang Mai as a place to operate confidence in the support the company was receiving in Thailand lack of confidence in Subic Bay as an investment location

14. Case Study: The Actual Story Location Decision Points Two decision points: Shortlist of one prime and one backup location after second visit Identification of a suitable facility following investigations by consulting firm On second visit, top execs toured industrial estates in ESB, South and Northeast Resulting in Korat�s being selected as the prime location, and Chiang Mai as the backup location Main factors: Stability of investment environment in both locations Support from BOI, local government, local community

15. Case Study: The Actual Story Location Decision Factors Main factors: Specific to Korat ability to lease a factory proximity to two major prospective customers apparent availability of labour quality of infrastructure ability to recruit engineers from Suranaree University, also use analytical services

16. Case Study: The Actual Story Location Decision Factors Major factors Specific to Chiang Mai High quality living and working environment High-quality infrastructure Presence of Lamphun Industrial Estate Location Decision: The company considered two properties in Korat and selected a factory in Suranaree Industrial Estate

17. Module 3: Image Building Group Exercise: Setting Goals for Image Building Step 1: For the following locations to be considered by each Breakout Group: 1. Saigon Hi-Tech Park � Micro-electronics 2. Vung Tau - Petrochemicals 3. Dong Nai - Textiles

18. Group Exercise: Setting Goals for Image Building Step 2: Meet to identify: What might be the key themes of an image building campaign for the location? What is the image you want investors to have of your location? Which misperceptions do you want to eliminate? What countries would be the main target for your efforts to develop a better image? What is the time-frame? Step 3: Present back to Plenary Session

19. Group ExerciseDeveloping a Press Release and Plan Identify a subject or event that you would prepare a press release for (justify why this is newsworthy). What would be the main features of the press release (headline, main content, graphics or pictures)? What would be your strategy for disseminating this press release? Be specific: who would you contact, what types of media, etc.

21. Module 4: Promotion MaterialsBackground to Group Exercise You are informed that the Government is committed to developing greater links between the Southern Provinces of Viet Nam and the countries to the west (Cambodia and Thailand � linked to the ADB-supported Greater Mekong Subregion Economic Cooperation Programme This will involve upgrading road and rail links, coordinating cross-border policies, and enhanced collaboration between the Vietnamese authorities and those of the other countries

22. Objectives of the Southern Economic Corridor Promote regional cooperation, foster economic integration, support increased trade and investment, and facilitate exchange and development along the east-west axis between and among Thailand, Cambodia, and Viet Nam Facilitate the development of economic corridors encompassing major cities in Thailand, Cambodia, and Viet Nam through the provision of road and rail infrastructure linkages. � The goal is to develop a highly efficient transport system which allows goods and people to circulate or move around the subregion without significant impediment or excessive cost/delay.�

23. 13 Key ProjectsMost Involving Vietnam Core Transport: a) Bangkok-Phnom Penh-Ho Chi Minh City-Vung Tau Road Improvement Project b) Southern Coastal Road Corridor c) Southern Lao PDR-Sihanoukville Road Improvement Project d) Cambodia Central West-East Corridor Project (part of Northern Thailand-Southern Lao PDR-Northeastern Cambodia-Central Viet Nam Corridor Project) e) Thailand-Cambodia-Viet Nam railway development f) Water transport development g) Cross-border facilitation in the movement of goods and people h) Human resource development for the transport sector Other Infrastructure: i) Development of electric power grid j) Promotion of regional energy cooperation arrangements k) Telecommunications Backbone Development l) Mekong River tourism development m) Thai Cambodian Economic Cooperation Plan

24. Group ExercisePreparing a Fact Sheet Your task is to prepare a �fact sheet� to use the Southern Economic Corridor as a means to attract foreign investors to Southern Viet Nam Be sure to include your ideas on: Why the Southern Economic Corridor will appeal to foreign investors? What kinds of foreign investors? What kinds of information will you put into the fact sheet? How will you disseminate the fact sheet? Who might you team up with to publicize this �investment promotion opportunity�?

25. Module 5: Investment PromotionGroup Exercise Exercise to follow slide on �What Kind of Promoter are you?� Step 1: You must identify a target industry (to be selected by the Group) in your province/territory. Step 2: Your assignment is to develop a marketing plan to attract companies in this segment Your budget is $100,000 for direct marketing costs You have one year to meet an investment goal What is your marketing strategy, how would you phase your actions? Propose and defend the allocation of your budget to various promotion activities.

26. Possible Options to Allocate Your Budget Advertising US$____ Direct mail campaign US$____ Investment mission US$____ Hire a consultant to identify companies US$____ Contact companies directly US$____ Telemarketing US$____ Others�.. US$____ Think of innovative ideas to make your investment opportunity stand out!

27. Module 6: Developing a Targeted Investment Strategy You have been informed by the Government that your agency must develop a strategy for the software development sector Your task is to develop a targeted investment strategy for this sector Investment goals Principal selling theme Promotion materials Promotion approach You are given the SWOT analysis on the following slide to guide your thinking

28. Viet Nam Software DevelopmentA Preliminary SWOT Analysis Strengths Well-educated and literate work-force The existence of a small but dynamic software development sector that is expanding rapidly Weaknesses Costs of telecom services Quality and cost of existing Internet services Bureaucracy in certain areas such as the inspection of software imports/exports and general import/export procedures Opportunities The ease with which key buildings and locations could be wired up to high speed, broad band Internet services The ability to tap into the overseas Vietnamese community Threats The development of competitive software development operations in India, and to a lesser extent Philippines and Malaysia The lack of understanding among government officials of the importance of the service sector in the new global business environment

29. Module 7: Investor FacilitationInvestment Promotion Role Playing Group Exercise You will witness three real-life scenarios that need some customer care: Nervous Potential Investor Concerned Potential Expander Disgruntled Potential Disinvestor You need to come up with solutions for each of the three �problems� -- or lose the investment. Develop a strategy in your groups to report back to plenary

33. Module 8: Strengthening the Investment Climate Viet Nam�s consumer electronics industry is facing serious challenges: The industry is fragmented, and production scales very low Trade liberalization is making it hard for local firms to compete Local suppliers are not up to international standards, and import duties are high Serious problems remain with import/export procedures, double-pricing, and weak intellectual property

34. What to Do?Develop a Basic Retention Strategy Your assignment is to �learn� from the experience of the existing industry and develop a basic strategy to �keep� the consumer electronics industry in the country Each group will then present back to Plenary