31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Home / Investment / News
Urgent steps needed for Vietnam to attract high quality FDI
Ngoc Thuy 14:20, 2020/09/28
While global FDI is projected to decline by 40% year-on-year in 2020, FDI commitments to Vietnam in the first eight months dropped 13.7% year-on-year to US$19.54 billion.

At a time when countries around the world are competing for high quality foreign direct investment (FDI) as investors look to diversify their global supply chains, Vietnam should take more urgent steps to ensure its leading spot in this race, according to economist Nguyen Minh Phong.

 A high quality of FDI inflow would help the host country move forward in the global value chains.

Vietnam is currently home to 32,000 FDI projects with registered capital of a combined US$378 billion from 136 countries and territories.

While global FDI is projected to decline by 40% year-on-year in 2020, FDI commitments to Vietnam in the first eight months fell only 13.7% year-on-year to US$19.54 billion, and the disbursed amount was down 5.1% to US$11.3 billion. Such weaker declines are testament to Vietnam’s attractiveness in the eyes of foreign investors, stated Mr. Phong.

Nikkei Asian Review previously reported that Apple is planning to produce 30% of total classic AirPods, equivalent to three to four million units, in Vietnam after having started the process since March. Google, Microsoft or Panasonic are mulling to shift parts of their production chains in Asia to Vietnam.

The list could go on with other global names such as Pegatron, Amazon and Home Depot, who all considered Vietnam a viable option for their supply chains.

According to Mr. Phong, Vietnam’s attractiveness to foreign investors lie in its large population of nearly 100 million and growing middle-income class; young and dynamic labor force; cheap labor cost and rental fees at industrial parks which are 45 – 50% lower than regional countries, including Thailand, Malaysia or Indonesia.

These factors, coupled with Vietnam’s strategic location, stable socio-political environment, growing economy, partners of a number of next-generation free trade agreement (CPTPP, EVFTA, EVIPA), and success in containing the Covid-19 pandemic, have been a major plus for Vietnam in terms of FDI attraction.

A high-quality FDI inflow not only has spillover effects for local enterprises, but also helps the host country move forward in the global value chain.

Mr. Phong, however, said it is not easy to attract this investment capital flow given the fierce competition among countries around the world.

For Vietnam not to miss this opportunity and realize the target of at least 50% of enterprises using high technology by 2025 and 100% in 2030, the country should have a strategic vision and specific plan, Mr. Phong noted.

Firstly, Vietnam is expected to set up a host of criteria for high quality FDI projects, which stays in line with each development phase of the country and the world’s technological trend; focusing on improving the infrastructure and state management efficiency in a number of industrial parks designated for major FDI projects.

Secondly, there should be a portfolio of investment projects that are looking for FDI while government agencies must stay proactive in calling for high quality projects. In this regards, Mr. Phong expected the authorities to be prepared to meet investors’ requirements in terms of intellectual property rights, incentives, infrastructures, or legal framework, among others.

Thirdly, Vietnam should step up efforts in helping the supporting industries so that they are capable of joining multinationals’ production network chains.

The government’s task force specialized in attracting FDI should make recommendations to create breakthroughs in existing legislation to ensure mutual benefits of both investors and the country.

Mr. Phong said as the government plays a key role in luring high quality FDI, there should be a new mindset and governance to speed up the decision-making process, adding this would help Vietnam better persuade projects that are much sought after.

RELATED NEWS
TAG: Vietnam FDI high quality investment covid-19 coronavirus nCoV pandemic hi-tech Apple Microsoft Pegatron
Other news
17:42, 2022/42/11
IFC assists Vietnam to boost green finance for a low-carbon economy
Capital markets have a big role to play in Vietnam’s transition to a climate-resilient and low-carbon economy, helping mobilize green capital.
22:43, 2022/43/29
Vietnam's FDI outlays in 10 months jump 15% to exceed $17 billion
The total FDI disbursement in Vietnam this year is projected to hit $21-22 billion, up 6.4-11.5% year on year.
05:51, 2022/51/28
Actual FDI to Vietnam rises over 16% to US$15.4 billion in 9-month
Foreign businesses continue to show their confidence in Vietnam’s investment environment.
14:58, 2022/58/21
Construction of road connecting Northwest region kicked off
The project is essential to socio-economic development in the Northwest in general, and Lai Chau in particular.
21:32, 2022/32/16
Vietnam may face increased pressure on inflation control: Experts
Economists on September 16 forecast Vietnam may find it harder to tame inflation in Q4 and 2023.
14:39, 2022/39/09
Moody’s sovereign rating upgrade raises Vietnam’s appeal to foreign investors
A positive rating would put Vietnam in favorable position to attract both direct and indirect investment into the economy.