New FDI inflows are on the way, how to respond?

Vinh Phuc Industrial Park Management Board said that within August 2022, total newly and additionally registered investment capital in the province’s industrial parks amounted to $25.98 million and VND 1,750 billion, respectively, higher compared with the expected of 15-20 million USD and 1,000 billion VND.

Although there are no specific aggregated data for the whole country, some provinces and cities have provided their relatively optimistic results on attracting foreign investment capital during final months of the year.

Promising business travels

After the Covid-19 pandemic basically under control, business travels to Vietnam have become thriving. During the trip, Mr. Roh Tae-Moon, General Director of Samsung Electronics Group (Korea) shared that Samsung will continue to invest an additional $3.3 billion into Vietnam this year.

Whereas, more than 2 billion USD has been committed to invest in Samsung Electro-Mechanics Vietnam projects in Thai Nguyen and Samsung Complex HCMC – SEHC. The rest will be announced later this year. Foxconn is planning to invest 300 million USD in Bac Giang, besides Luxshare and Goertek are also constantly expanding their investments.

Most recently, a group of more than 25 businesses belonging to the Automotive Component Manufacturers Association of India (ACMA) has grasped an opportunity to learn about investment and business in the Vietnamese market. ACMA is a large-scale association with 800 members specializing in auto parts and components manufacturers, contributing more than 85% of the revenue of this industry in India.

Mr. Yuvraj Kapuria, President of YBLF (a member of ACMA), has expressed his wishes to cooperate with Vietnamese automobile enterprises to explore and exploit new markets and also been ready to “accept all modes of cooperation”, and the possibility of investing in production in Vietnam.

Earlier, Mr. Yerkin Tatishhev, founder and chairman of the multinational Kusto Group, paid a visit to Vietnam for discussion and potential cooperation. He revealed his plan to invest in social housing and infrastructure projects with hundreds of millions of dollars in capital in Vietnam. Specially, in the past 15 years, this businessman has invested more than 1 billion USD in 10 big deals in Vietnam.

Another famous businessman, Mr. Robert Wu, Chairman and CEO of Sharp Corporation (Japan), came to Vietnam and affirmed that he will continue to invest in expanding production and business facilities here and had optimistic comments about the economic prospects.

On 16/8/2022, Minister of Planning and Investment Nguyen Chi Dung and Minister of Industry and Trade Nguyen Hong Dien, participated and delivered a speech at a high-level online meeting with Mr. Chey Tae-won – Chairman of SK Group (Korea) considering the conditions and progress of investing in hydrogen and high-tech projects in the Mekong Delta using clean energy in Vietnam of this Group.

Recently, on the afternoon of August 24, at the Vietnam – Japan Business Forum taking place in Tokyo, Mr. Shigetoshi Aoyama, Vice President of JETRO, assessed Vietnam as a reliable destination for Japanese investors in some fields. Through survey, the percentage of Japanese enterprises wishing to return their investment to Vietnam in the next 2 years is 55%, highest among Southeast Asian countries.

Representatives of Japanese enterprises, Chubu Electric Power, Sojitz and Amano Enzyme… have also expressed their desires for energy developing cooperation in Vietnam industrial parks, markets development for enzyme products, and concurrently suggested that the Government of Vietnam would soon review the mechanisms on rooftop power, approve and issue the Power Master Plan VIII, complete and provide mechanism on direct power purchase and sale.

Commitment to reciprocal investment cooperation between businesses of the two countries is reflected in an array of memorandums of understanding signed at the forum. Japan has always been in the top 3 of major investors in Vietnam for many years.

Will these opportunities be fruitful?

Vietnam is one of the countries that has well responded to the Covid-19 pandemic. This is a good signal that the country is opening the opportunity to welcome a new investment wave. Vietnam has gradually stabilized politically with advantages of human resources and the domestic market that gradually improved.

The Government and ministries, branches and localities have demonstrated their determination to improve the investment environment particularly in promoting public investment, expending capital for the infrastructure system. Especially large-scale projects in transport sector also create a source of fascination, attracting foreign investment.

Besides the positive aspects, there remains several limitations. At the National Assembly forum, Minister Nguyen Chi Dung also shared concerns about obstacles in attracting and improving FDI capital, from the legal framework to land, labor skills… After specifying shortcomings, Minister Nguyen Chi Dung also proposed remedial measures which includes focusing on reviewing and timely adjusting foreign investment policies in line with global economic fluctuations. In order to achieve those targets, the Minister called for the cooperation of the whole society to create a competitive business investment environment that has to be open, and hassle-free. In addition, it is necessary to create the most possibly optimal conditions for the activities of investors from abroad.

The improvement on business environment has been on the edge of “breaking” due to huge effort on pandemic respond as warned by several economist.

Therefore, the Government needs to develop standards and regulations in selecting foreign investors with advanced and environmentally friendly technologies. Besides, it is also necessary to stringently implement policies on management and supervision of foreign investment in accordance with the new economic relations. In particular, it is necessary to encourage multilateralization and diversification of partners, investment forms with intertwined interests in foreign investment cooperation. “Do not pack all the eggs in one basket” in today’s unpredictable world.

Source: SaiGondautu