Bosch expands operations in Vietnam

The world’s leading technology and services supplier Bosch has announced that it will continue expanding its operations in Vietnam following success in 2012.

Last year, the German group’s global sales reached US$68.3 billion (up 1.9 percent against 2011), with Asian sales fetching US$16.4 billion. 

In Southeast Asia alone, its revenue was US$912.6 million, of which US$286.4 million came from the Vietnamese market, up 31.3 percent.

At a press briefing in HCM City on June 26, Vo Quang Hue, Managing Director of Bosch Vietnam, said Bosch is the largest European investor in Vietnam, with its facilities operating in Hanoi, HCM City, Danang and Dong Nai. 

Sales of its products last year saw growth rates of between 14 and 40 percent, making Vietnam the group’s second key market in Southeast Asia. 

Bosch considers Vietnam as its strategic investment destination in Southeast Asia, said Hue. 

Despite the impact of the global economic recession, the number of the groups employees increased 36 percent in 2012 to 1,200. 

In 2013, Hue said Bosch Vietnam will market new products and solutions and open new distribution networks across the country. 

In the next 3-4 years, Bosch Vietnam is planning to hire up to 500 research and development engineers.

In the future, the group will help build vocational training centres meeting German standards, to supply human resources to the company.

Source: VOV on June, 26, 2013

Hong Kong Group invests US$200 million in garment project in Vietnam

The TAL Group from Hong Kong plans to invest US$200 million to produce fabrics, garments and textiles in Vietnam. 

 

This is the second project of its kind in Vietnam.
During a recent working session in Hanoi with Deputy Minister of Planning and Investment (MPI), Cao Viet Sinh, TAL Hong Kong Development  Director Roger Lee said that his group wants to expand its investments in Vietnam with a US$200 million project to manufacture fabrics, garments and textiles.
The products will be produced using modern technologies that do not cause pollution and the company will ensure environment standards, he said.

Lee said that the group will also work on the project with representatives from the Vietnam National Garment and Textile Group (Vinatex)  and the Ministry of Industry and Trade (MoIT).

The MPI is willing to support and create favourable conditions for TAL to expand investment in Vietnam and has assigned the Foreign Investment Agency to contact TAL on supporting the progress of the project, said Deputy Minister Sinh. 

Source: VOV on June, 22, 2013

Saigon Metro, Vietnam

Constituted in 1976, the Socialist Republic of Vietnam has emerged from a modern history including colonial rule and war to become one of south-east Asia's fastest growing economies (6.23% GDP growth in 2008), with unexploited reserves of coal, iron ore and oil. There has been rapid and continuing growth of the two dominant cities, capital Hanoi (pop. approx 6.4 million) in the north and, around 1,100km to the south, the largest settlement and economic centre, Ho Chi Minh City (formerly Saigon, approx 8 million in the metropolitan area).

Contrasting with important trading partner Germany, a country with a very similar size and population, railway transport has played only a minor part in Vietnam's development. Almost two-thirds of the predominantly metre-gauge heavy rail network is accounted for by the line between Hanoi and Ho Chi Minh City (HCMC), and there is little rail application in urban transit.

However, consideration has turned from reliance on buses – although public transport use for city journeys has been as low as 5% – to creating a metro system to address the problems of congestion, protracted journey times and extreme pollution.

The latter is a particular problem due to the high use of motor scooters/bikes – there is an estimated four million around the city – and with increasing road use in general, the accident and casualty rate has further encouraged the case for rail.

In October 2009, the Vietnamese Government sanctioned plans for building the underground metro line of the project at a cost of about $1.2bn. Spanish consulting company Ardanuy Ingenieria won a feasibility study contract in October 2009 to provide solutions to build Line 4 of the six-line project.

In April 2009 Spanish firm Idom Ingenieria Consultoria was awarded the contract to conduct feasibility studies for Line 5 and Line 6 of the metro. The two feasibility studies are expected to cost $1.7m and was completed within a year.

GEV signed an agreement with Ho Chi Minh City’s Management Board of Urban Railway to construct phase one of Line 5 between Saigon Bridge and Bay Hien Intersection in September 2010. The work is scheduled to begin in April 2011.

The construction of Metro line 2 began in August 2010 and is planned to be completed by 2015, with commercial services scheduled to commence in 2016. The funding is partly from the government and loans from the Overseas Development Administration, Asian Development Bank and European Investment Bank.

The project

Ten years into the formation of the current state, Vietnam loosened domestic economic controls and began supporting foreign investment in the country. Attracting interest from several countries, this process has helped to create a substantial project for Vietnam's first rail-based rapid transit system. At an estimated $1.1bn cost, the government has approved the scheme for the first line.

"With increasing road use in general, the accident and casualty rate has further encouraged the case for rail."

The Japan Bank for International Cooperation is providing 83% of the finance, the remainder coming from the HCMC municipal government. The metro route's consultant and designer is the Japanese Nippon Koei Group, who has maintained a presence in Hanoi since 1991. By March 2008, German interests in Vietnam's future metro developments had also been strengthened following ministerial visits between the countries. There have been indications of financial support via the German public sector KfW Entwicklungsbank for later line projects.

Line routes

The metro project will have six lines. Line 1 of the project is 19.7km long and consists of a 2.6km-long underground section and a 17.1km elevated section. Line 1 will connect Ben Thanh Market in the central area to the amusement park at Suoi Tien in District 9. The line goes underground from Station 1 at Quach Thi Trang Roundabout area in Ben Thanh Market. It consists of two horizontally aligned two tunnels. After Station 3 at Ba Son the line shifts from underground to elevated. The underground section has a total of three underground stations. Line 1 also consists of a crossing at Saigon River.

Line 2 of the project will be 10.18km long and will run between Ben Thanh Market and Tham Luong. Line 2 will contain 11 stations. Line 3 will be 10.4km long and will run between Ben Thanh Market and Bin Tan District.

Line 4 will be 16km long and will begin from Lang Cha Ca traffic circle and end at Van Thanh Park in Binh Thanh district. Line 5 will span 17km between Can Giuoc Bus Station in District 8 and Thu Thiem New Urban Town in District 2. The route for Line 6 will be 6km long and run between Ba Queo in Tan Binh District and Phu Lam in District 6.

Infrastructure

Ho Chi Minh City occupies a low-lying site 60km (37 miles) from the South China Sea coast, and difficult ground conditions are envisaged. Restrictions may need to be placed on building in the areas expected to be needed for the metro project. The start of construction was announced in February 2008, with work beginning on a $28m system depot in Long Binh Ward, District 9.

The tenders for construction were invited in 2008, and compensation and site clearance for the project was completed by 2009. Although system aspects are to be confirmed, the 1,435mm gauge will differ from the country's other lines.

Completion of Line 1, which is due to have 11 surface and three sub-surface stations, also related bus stations, is expected in 2014. There is a commitment to make the system accessible for users with physical disabilities and for bus routes to act as feeder services to rail. Planning indicates several interchange points on the system as later lines are opened.

Rolling stock

The supplier of rolling stock and other equipment is yet to be specified. Six-car trains are to be deployed with a target daily loading of 162,000 passengers up to 2020. An end-to-end time of around 29 minutes is planned, with a train every five minutes through a 20-hour operational day.

"The HCMC transport master plan proposes five further metro lines which, with Line 1, will approximate to 107km (66 miles)."

No suppliers have been yet announced, although the potentially diverse funding arrangements may lead to rolling stock being sourced from several companies and countries.

Those with rapid transit experience who have expressed interest have included Japanese conglomerate Sumitomo Corporation (lead contractor for the Manila MRT-3 Phase 1 project) and two Europe-based companies who are already active in Vietnam, Alstom and Siemens.

Japan's Kawasaki Heavy Industries has also expressed its interest in providing locomotives and carriages for the project. Neighbouring China may also see opportunities with this emerging market.

Signalling and communications

Signalling aspects are to be announced. Along with other potential suppliers, French company Alstom is already active in this area of the market through their work with Vietnam Railways on the existing rail system.

The future

Anticipated completion date for the first line is 2014. The HCMC transport master plan proposed five further metro lines which, with Line 1, will approximate to 107km (66 miles). The same plan, which also included three monorail routes totalling 37km (23 miles), indicated completion of the schemes by 2020, by which time the population forecast is 13.5 million. With Ho Chi Minh City as Vietnam's main economic centre, it remains to be seen if the earlier studies for rapid transit in the capital, Hanoi, will be revived in some form.

Source: railwaytechnology

Panasonic will open a new factory in Vietnam

PANASONIC EXPANDS HOME APPLIANCE DEVELOPMENT THROUGH ITS

NEW WASHING MACHINE FACTORY IN VIETNAM

The inauguration of the factory with its integrated Research and Development facility will enhance Panasonic Appliances Vietnam Co., Ltd’s role in the appliance business in ASEAN region

Hung Yen, 20^th March 2013 – Today marks a milestone in Vietnam as Panasonic Appliances Vietnam Co. Ltd (PAPVN) inaugurates its new washing machine factory in Thang Long Industrial Park II, Yen My district, Hung Yen province.

The US$32 million factory, fully invested by Panasonic Corporation, is the first in Vietnam that integrates Research and Development (R&D) function with its manufacturing business.

The new factory will focus on the development of high performance washing machines which incorporates Panasonic’s advanced eco and smart technologies  reflecting its commitment to environmental sustainability. The factory aims to achieve 50% of production for the local market and 50% for export to other ASEAN countries.

The inauguration of the washing machine factory is expected to bring economic growth, social benefits, and contribute to local employment. The manufacturing facility aims to provide hi-tech products which cater to local and regional needs. Local employees will also be trained and equipped with manufacturing expertise and technological know-how.

In 2007, Panasonic R&D Center Vietnam Co.,Ltd was established, focusing on the innovation and development of software and electronic products. With the opening of an additional R&D center in Vietnam, the facility functions as a launch pad for innovation of home appliances, developing cutting-edge products with advanced designs for Vietnam and other ASEAN countries.

“This year marks the 40th anniversary of the establishment of diplomatic relations between Japan and Vietnam, and PAPVN will also celebrate its 10th anniversary. We are delighted to open our new washing machine factory and R&D center in light of this commemorative year. We are committed to contribute to Vietnam’s economy by enhancing our role in the refrigerator and washing machine business in the ASEAN region. In addition to creating more job opportunities for the locals,” said Mitsuhiko Nakamura, General Director of PAPVN.

“We are impressed with Panasonic’s new establishment in Hung Yen Industrial zone. This factory not only invests in manufacturing, but also in the R&D field. R&D investments are important in Vietnam so as to transform the local industry into a modern and developed model step-by-step. The locals in Hung Yen too will greatly benefit from this initiative by Panasonic,” commented Mr. Dang Minh Ngoc, Vice Chairman of Hung Yen People’s committee.

Construction of the facility commenced in March 2012. The factory targets to reach manufacturing capacity of 600,000 sets of washing machines per annum and provide employment to around 300 locals by 2014. Panasonic Vietnam Group currently has a total workforce of over 7,200 locals.

The factory’s establishment strengthens Panasonic’s presence in the Vietnam market and contributes to economic growth of the country. It also serves as a milestone for Panasonic in its next stage of business expansion in this emerging market.

Source: Panasonic VN

Vietnam Supporting Industries Forum #5

Vietnam Manufacturing Expo 2013 will host “Vietnam Supporting Industries Forum # 5” under the theme of “Technology Transfers: Taking Business Collaborations to Greater Success” to offer visions, best practices and experiences by the government and private sectors to keep the shorter distance for Vietnamese and Japanese industrialists to achieve their mutual objectives accordingly 

on 9 May 2013 from 13.30 – 16.00 hrs. 

at Ballroom, Melia Hanoi Hotel, Hanoi, Vietnam. 

No registration cost, limited seat available, pre-registration is required.

Simultaneous translation service from Japanese to Vietnamese is available. 

 

Source: vietnammanufacturingexpo

Starbucks to open first outlet in Vietnam in early February

Starbucks Corp said it will set up its first outlet in Vietnam early next month as the U.S. chain continues to expand in fast-growing Asian markets.

Starbucks said it will partner with Hong Kong's Maxim's Group to open its first store in Ho Chi Minh City and reiterated that Asia continues to be a significant growth driver for the company.
"Vietnam is one of the most dynamic and exciting markets in the world and we are proud to add Vietnam as the 12th market across the China and Asia-Pacific region," said John Culver, president, Starbucks China and Asia Pacific.

Starbucks already buys some of the highest-quality arabica coffee from Vietnam and said it is committed to sourcing more from the region in the long-run.
Vietnam is the second-biggest coffee producer in the world after Brazil.

Starbucks operates more than 3,300 stores across 11 countries in the China and Asia-Pacific region.

Through its licensed partner, Coffee Concepts (Hong Kong) Ltd, a unit of Hong Kong's Maxim's Group, Starbucks operates more than 130 stores in Hong Kong and Macau. Last year, Starbucks opened its first store in India.

Jan 3, 2013- Reuters

P&G expands its pampers plant in Binh Duong

Procter & Gamble (P&G) late last week broke ground for its pampers manufacturing plant expansion in the southern province of Binh Duong’s Ben Cat District.

The company said that the expansion was part of the company’s plan to increase its capital by US$80 million in three years.

In 2009, P&G developed the first category of Pampers Baby Care plant at VSIP 2 Industrial Zone in Binh Duong Province with initial capital of US$45 which uses the latest technology to manufacture diapers.

To meet the increasing demands at home and abroad, the company continues to invest an additional US$80 million in the next three years to expand the plant.

Manuel Roman as director of the plant said that the expansion would increase its capacity by 200% compared to the current capacity.

Emre Olocer, general director & CEO Vietnam, said at the ceremony that Vietnam is one of the priority investment markets of P&G as the group’s operation in Vietnam has seen the highest growth rate of the global P&G in three consecutive years.

Up to now, the investment of P&G in Vietnam has tripled to reach more than US$200 million in 2012 and will continue to increase in the coming years.

P&G stared operations in Vietnam in 1995 and now boasts a wide range of international standard consumer products such as shampoo, washing powder, soap, lotion, razor, toothbrush and diapers among others. P&G also export more than 30% of it production to such markets as Australia, New Zealand, Japan, Korea, India and ASEAN.

Source: Saigon Times on December 3,2012

Samsung to add $830 mln to Vietnam market

Samsung will pour US$830 million more into Vietnam by building a new production plant in the northern province of Bac Ninh.

The provincial authorities have just granted an investment license to the South Korean tech giant’s local business, Samsung Electronics Vietnam, that allows it to construct a facility for producing mobile phones and other electronic products.

This will be its second such plant in the county, and is expected to merge with Samsung’s current facility in the same province to form the so-called Samsung Complex, worth around $1.5 billion in total.

The company inaugurated its existing facility, which cost $700 million to build, in October 2009 to make mobile phones for the global market.

The plant has attracted 53 sub-investors and provided work for 24,000 people since its opening.

It is expected to churn out an estimated 100 million cellphones and yield over $10 billion in exports this year.

Source: Tuoi Tre

Gresik acquires Vietnam firm, eyes Myanmar

The country’s largest cement producer PT Semen Gresik has entered into a deal to acquire a majority stake in a cement producer in Vietnam and is considering a similar move in Myanmar as part of the company’s regional cement market expansion plans.

Semen Gresik signed on Wednesday a conditional sale and purchase agreement for the acquisition of Thang Long Cement from one of the current shareholders, Hanoi General Export-Import Joint Stock Company (Geleximco).

“The planned transaction will depend on the fulfillment of requirements agreed by Semen Gresik and Geleximco. The transaction is expected to be closed this December,” Semen Gresik president director Dwi Soetjipto said after the agreement-signing ceremony.

Dwi declined to reveal either the size of the stake his company would take in Than Long Cement nor the value of the planned transaction.

“We will be a majority shareholder. That’s all I can say now,” Dwi said.

Thang Long Cement is one of the many cement companies operating in Vietnam and currently owns a cement plant in Quang Ninh province and a grinding station in Hiep Phuoc Industrial Park, Ho Chi Minh City. Thang Long Cement has a production capacity of 2.3 million tons of cement per year.

Thang Long Cement also has secured two licenses to develop new factories in Quang Ninh province and Binh Phuoc province.

“We are very excited to begin cooperation with a prominent cement maker in Indonesia such as Semen Gresik. We will back two new cement plants to bring the total production capacity to 6.5 million tons per year in several years,” Geleximco chairman Vu Van Tien said.

Dwi said that Semen Gresik would also study Thang Long Cement’s plan to establish new plants to increase its production and grab a bigger share in Vietnam’s cement market.

Semen Gresik said that it would finance the acquisition of Thang Long Cement with its internal cash and external funding.

Semen Gresik finance director Ahyanizzaman cited that the company was currently in an excellent financial condition with it’s cash flow recorded at Rp 3 trillion. The company, he said, also still had standby loans amounting Rp 1 trillion from Bank Mandiri.

“Roughly the financing [for the acquisition Thang Long Cement] will be 60 percent by external loans and 40 percent by internal cash,” Ahyanizzaman said.

In addition to its plans to acquire Thang Long Cement in Vietnam, Semen Gresik is seeking partners to enter the Myanmar market.

Dwi said that Semen Gresik was in talks with two private companies in Myanmar about the possibility of establishing joint ventures. “Semen Gresik will be the majority shareholders,” Dwi said.

Entering Vietnam and Myanmar is part of Semen Gresik’s effort to establish itself in the regional market. “This is a strategic action, not only to strengthen our market shares but also to anticipate the ASEAN free trade area,” Dwi said.

Semen Gresik currently has a production capacity of 23 million tons of cement per year. The company, along with its subsidiaries Semen Padang and Semen Tonasa, sold 15.96 million tons of cement during the January to September period to the domestic market, which recorded 39.47 million tons of cement consumption during
the period.

Source: Jakarta Post

Foreign investors show interests in airport development projects in Vietnam

A South Korean company has expressed a desire to develop an airport in Quang Ninh province, while a Japanese investor is eyeing the Long Thanh airport project and US investors have arrived to seek investment opportunities.

Unable to develop airports with just state sourced money, Vietnam is seeking capital from private foreign investors. The information has driven the special attention from the international community to Vietnam, which has been developing the aviation infrastructure system with its own capital so far.

Vietnam plans to build five more airports by 2020 and upgrade the 21 existing airports in order to serve the socio-economic development. It is estimated that the works would cost 220 trillion dong, a huge capital sum which cannot arrange itself. Therefore, it has been trying to call for foreign private investment.

The Quang Ninh airport project announced in April 2012 needs roughly 250 million dollars in investment capital by 2030. The Quang Ninh provincial authorities then informed that two South Korean investors, namely the ROK Airport Corporation and Jionus Company showed the interests in the project.

When asked about the implementation of the project, a senior official of the provincial authorities said the South Korean investors were told to complete the works for the investment preparations and submit their plan to the provincial authorities in 2012. However, no reply has been received from the investors so far.

Meanwhile, Tadashi Okamura, Chair of the Japan Chamber of Commerce and Industry, said at the dialogue between Vietnamese and Japanese businesses held recently that Japanese enterprises are willing to cooperate with Vietnamese partners to develop the Long Thanh airport.

Besides South Korea, Japan and the US have been interested their desire to make investment in the airports in Vietnam for a long time. In 2010, the US ADC & HAS, specializing in developing airports, met the leaders of the Da Nang City to discuss the development of an airport in the city.

In 2011, the US group showed its interest in the Cam Ranh airport project. And in September 2012, it once again put forward the airport development under the mode of PPP (private public partnership) at the meetings with the leaders of the Ministry of Transport.

Le Manh Hung, General Director of the Vietnam Airport Corporation, has confirmed that Vietnam is considering different investment modes for airport development, including the PPP.

In the past, Vietnam tried to develop airports with its own money. However, with the increasing demand for infrastructure, Vietnam tends to diversify the investment capital sources.

Hung went on to say that the Ministry of Transport has set up an agency in charge of pushing up the investment projects under the mode of PPP.

US investors also highly appreciate the idea of developing airports under different investment modes. The US Ambassador to Vietnam David Shear has also affirmed that the US is actively working with the Vietnamese side to implement the plan to develop aviation infrastructure.

However, State’s officials have said that special regulations would be applied for the PPP investment mode in the airport development, which is also a special business field.

An official of the Quang Ninh provincial authorities said that the State would inject money and control key infrastructure items, while private investors would be able to exploit other items such as the terminals, port authorities’ houses and services.

Vietnam’s aviation industry has been witnessing a steady growth rate of 18 percent in 2006-2011.

A lot of projects have been carried out to serve the aviation industry development, including the T2 terminal at Noi Bai Airport, the project on upgrading Tan Son Nhat airport to be capable to serve 25 million passengers a year, the Phu Quoc international airport project in Kien Giang province which is expected to become operational in December.

Compiled by C. V

Source: VIETNAMNET Bridge

Hedging China risks, Japan firms turn to booming Southeast Asia

By Stuart Grudgings

PHNOM PENH, Nov 6 (Reuters) - Hiroshi Uematsu had a tough start in Cambodia, where he heads an economic zone that aims to attract business from his native Japan. He arrived just before the global financial crisis sent the Asian economic minnow's exports into a tailspin and dried up investment interest.

Now, though, business is looking up.

About a third of the lots on the 365-hectare (900-acre) site on the outskirts of the capital Phnom Penh remain vacant and overgrown, roamed by scrawny cattle. But they are being snapped up by household Japanese company names such as Yamaha Motor , food maker Ajinomoto and electronics firm Minebea.

Next to Uematsu's office, a convenience store sells several brands of sake, "Tokyo burgers" and a variety of Japanese savoury treats for homesick executives.

The turnaround in Uematsu's fortunes mirrors a broad trend of surging Japanese investment in Southeast Asia as China's appeal is undermined by rising wage costs and spiking tensions with its neighbour over territorial disputes.

"China used to be the factory of the world," said Uematsu, a 45-year-old from Japan's mountainous Gifu prefecture who says he gets calls every day from companies interested in the Phnom Penh Special Economic Zone. "We can't say so anymore."

CHINA RE-THINK

Almost a quarter of Japanese manufacturers are re-thinking their China investment plans, according to a Reuters Corporate Survey carried out after the recent tensions between the nations over disputed islands.

Japan's tsunami disaster and flooding in Thailand last year provided another sharp reminder of the need to diversify operations to avoid another rupture in global supply chains.

Japan's net foreign direct investment (FDI) into the 10-country Association of Southeast Asian Nations (ASEAN) more than doubled last year to a record 1.55 trillion yen ($19.5 billion), data from Japan's Finance Ministry shows. Japan's net FDI into China is still rising, jumping 60 percent in 2011 to a record 1 trillion yen.

But Japanese firms, encouraged to expand abroad by a strong yen, are increasingly using Southeast Asia as an alternative manufacturing base to balance their China risks. Japanese government and business leaders have also been among the fastest to tap the potential of Myanmar's dramatic opening, pouring in billions of dollars in infrastructure spending, debt forgiveness and refinancing.

NOT JUST CHEAP

It's not just about cheap wages. The region of 600 million people also offers a growing source of demand for Japanese cars, electronics and services as robust growth expands the middle class. Malaysia and the Philippines, where wages are higher than Vietnam or Cambodia, have also seen rising Japanese interest.

Infrastructure investment in railways and roads is booming and ASEAN is working towards establishing a European Union style single market by the end of 2015, making it easier for multinationals to link up their cross-border operations. The region's economies have been resilient this year to weak growth in the United States, Europe and China.

Japan's net investment in ASEAN came to 418 billion yen in January-August, finance ministry data show, but those figures may not reflect many pledged deals. In the April-June quarter, net FDI in ASEAN rose 37 percent from a year ago.

ASEAN countries' latest FDI data also suggest the trend of strong Japanese investment is intact.

In Vietnam, for example, Japanese pledged investments jumped to $4.9 billion in January-October, double the total for all of last year, government data show.

"In 2011, Japanese companies were given a lesson from two disasters," said Hirokazu Yamaoka, Hanoi chief representative for Japan's JETRO trade promotion agency. "This year, the risk of China has been recognized and they study more about risk sharing for manufacturing."

ASEAN GROWTH

Approved Japanese investments in Thailand nearly tripled in January-September to around $8.1 billion, data from the Board of Investment of Thailand show. Nissan Motor Co, which aims to more than triple its ASEAN sales to 500,000 vehicles by 2017, said on Friday it will build a second assembly plant in Thailand for $358 million.

"The reason we're investing in Thailand more is because we trust in the growth in the ASEAN region and Thailand," Nissan Executive Vice President Hiroto Saikawa said. "China's economy is Slowing down, but is still growing and is a very important market for us."

In Indonesia, Southeast Asia's largest economy, Japan's net direct investment is on course for a record year after surging to 288 billion yen in 2011 from 41 billion yen in 2010. In the first eight months of this year, net Japanese investment already totalled 237 billion yen, according to Japan's Finance Ministry.

Japan said last month it plans to provide $13 billion in funding for infrastructure projects in Indonesia, where the growing wealth of the 220 million population makes for a huge domestic consumer market.

Car makers Honda Motor Co and Suzuki Motor Corp have announced major expansion plans in Indonesia this year, and Toyota Motor Corp is considering building a third car plant as it aims to triple annual output there to 300,000 vehicles, according to Japanese media reports.

THAI FLOOD WARNING

Japanese companies are also diversifying within Southeast Asia, prompted by last year's severe floods in Thailand, which has long been their favoured regional manufacturing hub.

Malaysia's northern Penang state, which aims to become a regional logistics hub, and surrounding areas near the Thai border have seen an influx of Japanese firms in recent years.

The Philippines is winning higher-tech Japanese investments in areas such as laser printers and advanced lenses for digital cameras. Japan's net FDI flows there doubled in 2011 to 81 billion yen.

The Thai floods also gave a shot in the arm to Cambodia's burgeoning manufacturing industry, where wages can be up to a quarter of those in China, although the country remains focused on relatively low-tech assembly work for now.

Minebea, for example, trucks components from Thailand to be assembled at the Phnom Penh economic zone before transporting them back to Thailand for higher-end work. The company, which makes tiny motors used in electronic gadgets, recently bought up a second factory lot to expand its capacity in Cambodia, and expects to have 8,000 workers by the end of next year.

"Japanese investors are hard to convince, but once they are they move very fast," said Peter Brimble, the Asian Development Bank's senior country economist for Cambodia.

On Cambodia, he said, they have "made the decision," despite concerns over a lack of qualified labour and weak transport infrastructure in one of the region's poorest countries. Japanese investment in Cambodia is already at $300 million this year, up from $75 million in 2011, Cambodian figures show.

Uematsu said interest among Japanese firms in producing in Cambodia picked up in 2010, rose after anti-Japan protests in China that year and surged again after a fresh wave of protests in September. China, Uematsu said, has also become a "headache" for Japanese firms because of sharply rising wages and sometimes testy labour relations.

"Young Chinese people don't want to work in a factory any more. There are many other opportunities," he said.

Japanese companies increasingly see Thailand, Cambodia and Vietnam as a single production corridor, he said, comparing the Mekong region to the main industrial cities in his home country.

"It's getting to be nonsense to divide it into three countries. It's one region," he said. "Bangkok is Tokyo, Phnom Penh is Nagoya and Ho Chi Minh is Osaka." (Additional reporting by Kaori Kaneko and Yoko Kubota in TOKYO, Prak Chan Thul in PHNOM PENH, Rosemarie Francisco in MANILA, Ngo Chau in HANOI, Neil Chatterjee in Jakarta, Jason Szep and Sinsiri Tiwutanond in BANGKOK; Editing by Ian Geoghegan)

Source: Reuters