Vietnam must prepare for new wave of investments

Many provinces and cities across Vietnam have announced quite optimistic results in attracting Foreign Direct Investment (FDI) projects in the last months of the year. 
Vietnam must prepare for new wave of investments ảnh 1

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In August, the Vinh Phuc Industrial Parks Management Board stated that the total new registered investment capital in industrial zones in Vinh Phuc province had reached VND 1,750 bln, much higher than the expectation of VND 1,000 bln, although there is as yet no general data for the whole country.

Investment commitments

After the virulent outbreak of the Covid-19 pandemic was brought under control, many foreign businesses began to enter Vietnam once again. During one of his trips, Mr. Roh Tae-Moon, General Director of Samsung Electronics Group from South Korea, said that Samsung will continue to invest another US$3.3 bln in Vietnam this year.

The company has committed to investing more than US$2 bln in Samsung Electro-Mechanics Vietnam projects in Thai Nguyen and Samsung Complex HCMC-SEHC. The rest of the investment amount will be announced in the coming months of the year. Foxconn is also planning to invest another US$300 mln in Bac Giang, while Luxshare and Goertek companies are constantly expanding their investment amount.

Recently, a delegation of 25 businesses from the Indian Automobile Parts Manufacturers Association (ACMA) visited Vietnam to explore future investment and business opportunities. ACMA is a large-scale association with 800 members who are auto parts and components manufacturers, and which contribute more than 85 percent of revenue from this industry to the Indian economy.

Mr. Yuvraj Kapuria, Chairperson of Young Business Leaders Forum (YBLF) of ACMA, which is a subset body within ACMA, said that ACMA wishes to cooperate with businesses in the Vietnamese automobile industry to jointly explore and exploit new markets. Mr. Kapuria also expressed eagerness to accept all modes of cooperation as well as the possibility of investment and production in Vietnam.

Mr. Yerkin Tatishhev, founder and chairman of the multinational Kusto Group, also visited Vietnam last week. Speaking with concerned authorities and potential partners, Mr. Yerkin Tatishhev revealed his plans to expand the investment of hundreds of millions of US dollars in the field of social housing and infrastructure projects in Vietnam. Mr. Yerkin Tatishhev has already invested more than US$1 bn in ten major projects in Vietnam over the last fifteen years.

Mr. Robert Wu, Chairman and CEO of Sharp Corporation in Japan, also recently arrived in Vietnam, reaffirming his intention to continue investing in expanding production facilities, and doing business here. Mr. Robert Wu was very optimistic about the prospects in Vietnam and commented on the growing economy.

In mid-August there were online discussions between Mr. Nguyen Chi Dung, Minister of Planning and Investment, Mr. Nguyen Hong Dien, Minister of Industry and Trade, and Mr.  Chey Tae-Won, Chairman of SK Group in South Korea for investment in hydrogen projects in the Mekong Delta and high-tech projects for using clean energy in Vietnam.

Recently, under the framework of the Vietnam-Japan Business Forum, Mr. Shigetoshi Aoyama, Executive Vice President of the Japan External Trade Organization (JETRO), asserted that Vietnam was a reliable destination for Japanese investors in many fields.

According to a survey by JETRO, over 55 percent of Japanese enterprises want to invest in Vietnam in the next two years. At the forum, representatives of Japanese enterprises, such as Chubu Electric Power, Sojitz, and Amano Enzyme, made specific proposals on cooperation in energy development in industrial zones in Vietnam and market development for enzyme products. They suggested that the Government of Vietnam consider the mechanism on roof voltage, promulgate the Power Master Plan 8, and complete the mechanism of direct electricity supply and sale.

New opportunities

These are all good signs that show that Vietnam is in a position to offer new opportunities and welcome a new wave of investments. Vietnam was well able to control the Covid-19 pandemic, has maintained political stability, has an advantage of huge human resources, and a strong domestic market.

The Government, ministries, and localities are all determined to improve the investment and business environment and focus on promoting the country as a stable location for investments. Vietnam is pouring capital into the infrastructure system, especially large-scale projects in the field of transport, to make it more convenient for businesses in the future.

However, it is undeniable that there are still many limitations in this area. Mr. Nguyen Chi Dung shared his concerns at the National Assembly forum about obstacles in attracting and improving the quality of FDI capital, from the legal framework to land and labor skills. According to Mr. Nguyen Chi Dung the solutions to overcome are to promptly review and adjust foreign investment policies to suit and keep up with the fluctuations of the global economy and change strategies to attract FDI enterprises of countries around the world.

The more difficult challenge is the cooperation of the whole society and to create a competitive and open business investment environment. This will require removing difficulties and obstacles in policies to create the most favorable conditions for foreign enterprises and investors. The implementation of Resolution 19 and later Resolution 02 of the Government on this issue should be implemented more drastically.

Many economic observers have warned that because of the recent tensions caused by the Covid-19 pandemic, the process of reform and improvement of the business environment is slowing down and may even be disrupted again. Therefore, the Government needs to develop regulations and standards to select foreign investors with advanced and environmentally friendly technologies.

There is also need to urgently complete and strictly and effectively implement policies on management and supervision of foreign investments in accordance with new economic relations, new business models and methods, and protect the domestic market appropriately with international commitments and practices.