Tata chairman says VN ripe for investment

By VietNamNet/VNS
May 01, 2009

VietNamNet Bridge - Tata Steel is preparing to invest US$5 billion in a steel project in Viet Nam this year. The director of Tata Sons, chairman of Tata International and member of the Confederation of India Industry National Council, Syamal Gupta, talked about the project.
As a member of the Confederation of India Industry (CII) National Council, what do you think about Viet Nam’s investment potential?

Presently, we do not have any major concerns. We believe that the present government policies are aligned to be investor friendly. However, there are a couple of things that can be improved.
Firstly, there should be greater people-to-people interaction between Viet Nam and India. While there have been many business delegations from India since July 7, there have been very few business delegations from Viet Nam to India. This would enhance greater awareness about the business potential in Viet Nam in the Indian business community.

Secondly, in some sectors, licenses awarded are not as per the master plans of the central Government. This may lead to future over capacity and hence lead to investments becoming economically unviable.

Why did Tata Group decide to invest in Viet Nam despite the global economic depression?
The Tata Group had identified Viet Nam as a priority country for investment long before the Global Recession in 2007. Thereafter Tata Steel made its big investment decision that same year.

When we invest, it is from a long-term perspective. The recession is temporary.
We believe in the fundamentals of the Viet Nam economy and the policy-making of the Government.

Tata companies operate in seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals. They are, by and large, based in India and have significant international operations. The total revenue of Tata companies, taken together, was $62.5 billion in 2007-08, with 61 per cent of this coming from businesses outside India. They employ around 350,000 people worldwide. The Tata name has been respected in India for 140 years for its adherence to strong values and business ethics.
Every Tata company or enterprise operates independently. Each of these companies has its own board of directors and shareholders, to whom it is answerable. There are 35 publicly listed Tata enterprises, and they have a combined market capitalisation of some $60 billion, and a shareholder base of 3.2 million. The major Tata companies are Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Tea, Indian Hotels and Tata Communications.

What should Viet Nam do to promote trade and to overcome the economic crisis in general and with India in particular?

It is highly appreciated that the Government of Viet Nam has taken several steps in terms of macro-economic policies to minimise the effects of the crisis.

Firstly, Viet Nam should internalise its demand, which means it should create favourable conditions to promote manufacturing industries either through FDI or through domestic investment. This will reduce the dependence on imports and hence lead to a better trade balance. It is somewhat similar to the India model. You must be aware that India is one of the countries least affected by the global economic downturn.

Secondly, Viet Nam should consider distributing its exports across the globe rather than concentrating only on the West. That is even more the case now that today global demand is shifting from the West to the East. Hence, Viet Nam should actively promote exports to Asia also. The above two macro-policy moves would further minimise the impacts of the global economic crisis on Viet Nam.

Besides steel, what other fields is Tata interested in? Can you reveal Tata’s investment plans for Viet Nam in the near future?

Viet Nam continues to be one of the priority countries for the Tata Group. Tata Steel’s projects in HaTinh Province have been our flagship projects in Viet Nam up till now. It has successfully completed its feasibility study and has applied for an investment licence, which it is awaiting. This is a $5 billion project and will have a great economic impact on the central province of HaTinh and its neighbouring provinces.

Besides that we have also established Tata International Viet Nam, which islooking into bilateral trade in leather, coffee, cars and so on. Tata Consultancy Services is in discussions with banks here about implementing their banking IT solutions.

Tata Motors is discussing with a Vietnamese motor company plans to introduce commercial vehicles here. As and when suitable opportunities come up, Tata Power will be interested in participating in power projects.

There are several other such initiatives which are at different stages involving other Tata Group companies. However, we are all looking forward to the successful implementation of the steel project. Other Tata Group companies will be encouraged and motivated to invest in Viet Nam once that project moves forward quickly.

Bilateral trade turnover between the two countries last year reached about $2.5 billion. Of which, Viet Nam imports items from India worth $2.1 billion. Do you think the figure will eventually be more balanced?

Yes. This can be balanced in two ways. Firstly, by increasing exports to India. There are definitely certain areas and products where Viet Nam is more cost competitive than India. There should be more people-to-people interaction between Viet Nam and India.

Secondly, promoting Indian investments in the manufacturing sector in Viet Nam. Once these plants start producing, I am sure there will be a certain percentage of exports to India also. This will also bring down the trade gap.