Telstar Vietnam, a UK-invested company in Bac Giang province. A number of foreign investors were eyeing Vietnam to be the destination for their investments.(Photo: VNA)Many enterprises from countries such as the UK, the Republic of Korea and Japansaid Vietnam is an attractive investment destination, given the country’sstable macro-economy, rapid growth and large market with a rising middle class.
Foxconn, Apple’s biggest contractor, was reported to sign a lease to occupy anew site in Bac Giang province in a deal worth around 62.5 million USD toexpand production capacity, part of the effort to shift production away fromChina. This was evidence that Vietnam was becoming an attractive destinationfor FDI in the global production shift.
The European Chamber of Commerce in Vietnam (Eurocham)’s 2022-2023 Whitebook,which was launched late last week, pointed out that Vietnam was an attractiveFDI destination thanks to the country’s stable macro-economic environment andcontrolled inflation, which consolidated investors confidence in the trade andinvestment environment.
The low cost of doing business, strong economic growth, rising middle class anda favourable business environment have made Vietnam an attractive destinationfor foreign investment, EuroCham said.
Jens Ruebbert, vice chairman of the EU-ASEAN Business Council, said whileleading an EU delegation to visit Việt Nam recently that Vietnam is playing aneven more important role with the EU in terms of trade and investment,especially in the context of the current volatile world.
He said that many EU companies were interested in the Vietnamese market andconsidered it very important.
A survey by the Japan External Trade Organisation (JETRO) published recentlyshowed that about 60% of Japanese firms planned to expand their operations inVietnam, the highest rate in Southeast Asia.
Nakajima Takeo, chief representative of JETRO Hanoi, said that Vietnam wasbecoming an indispensable part of the global supply chains of Japaneseenterprises.
Japanese companies and those from Singapore, the Republic of Korea, and Taiwan(China) were also eyeing the Vietnamese market.
During Prime Minister Pham Minh Chinh’s recent visits to Singapore and Brunei,investment funds and investors from the two countries confirmed their interestin investing in Vietnam.
At the Vietnam - Singapore Business Forum taking place during Chính’s visit toSingapore, Patrick Lee, chair of the Board of Members of Standard CharteredBank Vietnam (Limited), said that Vietnam is a rising star in the region.
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Vietnam’s attractive investment policies and favourable demographics made itthe market of choice for many Singaporean investors and businesses. With thecountry’s burgeoning consumer market and opportunities from green energy toinfrastructure development, Standard Chartered saw greater interest amongSingaporean clients to expand into Vietnam, he said.
At a recent conference on promoting the Government’s action plan to implementthe 13th-tenure Politburo’s Resolution No.30-NQ/TW on orientations for socio-economicdevelopment and safeguarding defence and security in the Red River Delta to2030 and vision to 2045, nearly 10 billion USD were committed for the region inthe coming time.
In the region, Hanoi, Bac Ninh, Vinh Phuc, Quang Ninh, Thai Binh, and Hai Phongwere all 'magnets' attracting investment in recent years. This was the secondlargest FDI attraction in the country, accounting for 31.4% of the total FDIthat Vietnam had attracted in the past 35 years.
Major global groups, such as Samsung, LG, Honda, Canon, Foxconn, and Toyota,have chosen localities in the region and made them their production bases.
There are several things which Vietnam needs to improve to attract FDI.
According to JETRO, Japanese enterprises are still hesitant about some risks ofthe Vietnamese business environment related to the transparency ofadministrative procedures, tax system, tax procedures, legal system, visaprocedures and work permits.
In addition, increasing labour costs also factor into attracting FDI.
Vietnam could attract more FDI by reducing administrative obstacles, improvinginfrastructure, improving human resource capacity and reducing visa barriersfor foreign experts, EuroCham said.
Adopting a global minimum tax rate of 15% by 2024 put the global competition toattract FDI into a new phase.
As a capital importer applying tax incentives quite widely, Vietnam faced manybig questions. The biggest is how to maintain the advantage of attracting FDIand direct the flow into industries and fields that the economy needs.
Phan Duc Hieu, a member of the National Assembly's Economic Committee, saidthat when tax incentives were no longer a dominant and attractive tool, thealternative solutions were nothing but a favourable business environment whereinvestment was more efficient, the burden of complying with laws was reducedand procedures were more transparent and faster.
“The Vietnamese economy is still in the process of reform. This is anopportunity for Vietnam to implement the economic restructuring plans moreefficiently,” Hieu said.
Dau Anh Tuan, deputy general secretary of the Vietnam Chamber ofCommerce and Industry, said that FDI companies were expecting improvements inthe quality of human resources, land fees, infrastructure quality, logisticscosts and quality together with policies on science and technology.
Those are prioritised in reform plans, but the room to create breakthroughs is notmuch, Tuan said. It’s time Vietnam prepares for the global minimum tax, hestressed./.
Those are prioritised in reform plans, but the room to create breakthroughs is notmuch, Tuan said. It’s time Vietnam prepares for the global minimum tax, hestressed./.
VNA
