Philippine infrastructure conglomerate Metro Pacific Investments said on Friday it has agreed to buy a stake in a water company in Vietnam, in a deal that comes less than a week after it took over an Indonesian toll road operator.
A Metro Pacific unit has agreed to acquire 45% of the outstanding capital stock of BOO Phu Ninh Water Treatment Plan, which holds a license to distribute water in Chu Lai Open Economic Zone, as well as in other areas around the central province of Quang Nam, according to a filing to the Philippine Stock Exchange. The stake is valued at 272.4 billion Vietnamese dong ($12 million), subject to price adjustment through an escrow mechanism depending on the fulfilment of certain conditions.
Metro Pacific, a Philippine affiliate of Indonesia's Salim Group, runs water, road, and power utilities in the Philippines and is seeking to expand across Southeast Asia, a fast-growing region of over 600 million people that badly needs infrastructure upgrades.
Last year, Metro Pacific also set up a joint venture in Indonesia for water projects. Its counterpart at home, Ayala Corp., has previously secured water projects in Ho Chi Min City and Myanmar and is working on a deal in Thailand.
The Vietnam water deal follows Metro Pacific's announcement on Monday that it has increased its stake in tollway firm Nusantura Indonesia to over 47%, from around 5%. Metro Pacific had earlier invested in tollways in Thailand and Vietnam, becoming one of Southeast Asia's biggest private toll road operators. Chairman Manuel Pangilinan on Wednesday said the company expects to strike a deal in Malaysia next year.
According to the Vietnam’s Association of Foreign Invested Enterprises (VAFIE), provinces/cities with large scale foreign direct investment (FDI) projects, such as Bac Ninh, Thai Nguyen, Vinh Phuc, Hai Phong, Thanh Hoa (in the north), Binh Duong, Dong Nai (in the south), the contribution of FDI sector has basically transformed the economic structure of each province and city. For example in Bac Ninh, thanks to efficient attraction of FDI, in recent 5 years, Bac Ninh has transformed from an agricultural province to an industrial province, as agricultural activities contribute to 8% of the economy, while industrial activities and services contribute for 82%.
Statistics from the Foreign Investment Agency of the Ministry of Planning & Investment, as of September 2017, Vietnam has attracted 24,199 FDI projects from 116 countries and regions in the world, with total registered capital of 310.19 billion USD. Despite being one of an attractive destination for foreign investors, the rate of technology transfer through FDI sector to the domestic sector in Vietnam remains lower than other neighboring countries, which is decreasing in tendency.
Specifically, in 2009, Vietnam was in 57th rank in the world with regard to the efficiency of technology transfer, but in 2014, Vietnam has gone down to the 103rd place, a decrease of 46 ranks compared to 2009, which is much lower than other neighboring countries, such as Malaysia at 13rd rank, Thailand in 36th rank, Indonesia in 39th rank and Cambodia in 44th rank.
