The plant, situated in Binh Duong province, will cover 7.1 hectares and is expected to come on stream early next year.
General director Emiel M.J. de Pauw said the factory will initially make aluminum beer and beverage cans, with an annual capacity of 500 million cans.
The company expects to sell 70- 80 per cent of its output on the domestic market and the rest will be exported to neighbouring countries like Cambodia, Laos and Thailand.
Vietnam's beverage sector is growing rapidly as higher consumer purchasing power drives growth of the packaged foods market.
More than 200 new beverages launched in the Vietnamese market in the first 10 months of 2005, nearly double that of 2004, according to a survey conducted by Asia Panel TNS Vietnam. It also revealed that consumers are increasingly looking for quality and convenient products.
US can maker Crown has also announced that it will up its aluminium can production this year, adding a new line at its Ho Chi Minh City plant to almost double capacity in the fourth quarter.
Total annual output from this facility will be more than 1 billion cans.
API is a joint venture business set up by Japan's Toyo Seikan Kaisha (TSK) and Hong Kong-based Davlyn Steel. Davlyn, which holds the majority 55 per cent share, is also the majority shareholder of Indonesia-based P.T. United Can, a leader in metal packaging in Southeast Asia.
The company said it also has plans to diversify into other packaging materials, such as PET bottles, in the future.