The government of Vietnam needs to improve the business environment and transport infrastructure, in addition to simplifying administrative procedures, to attract the expected new FDI 'wave'.
Former Deputy Minister of Foreign Affairs and former Vietnamese Ambassador to the US Pham Quang Vinh believes that Vietnam is in the right position to receive FDI flow in during the relocation trend.
However, Vinh said there will be both high- and low-quality investment capital, and Vietnam needs, for the sake of national interests, to choose high-quality and sustainable investments, especially from the US, European and Japanese investors.
Foreign investors are seeking non-China markets to make investment to diversify
supply chains. Vietnam, which is near China and has a favorable investment environment, can have less costs.
However, according to Vinh, there is no single country which can absorb all the investment capital to be relocated from China, the second largest economy in the world with 1.4 billion people, accounting for 20 percent of global trade.
Vinh said Vietnam needs to prepare infrastructure, policies and the labor force. Foreign investors will come only if they can see favorable conditions.
“There are many ‘other Vietnams’ competing to receive FDI. Be prepared well and give specific offers to investors to attract investments from the US, Europe and Japan,” Vinh said.
|Vietnam not only wants to become the supplier of products and materials, but also an important link in the global supply chain. This will be the basis for determining capital sources, technologies, and production or supply segments that Vietnam should strive for.|
Vietnam not only wants to become the supplier of products and materials, but also an important link in the global supply chain. This will be the basis for determining capital sources, technologies, and production or supply segments that Vietnam should strive for.
Jacques Morisset, World Bank's chief economist in Vietnam, at the event organized on the occasion of the launching of the report ‘Vibrant Vietnam: Forging the Foundation of a High-Income Economy’ commented that the shocks caused by Covid-19 have made global enterprises realize the need to diversify supply chains.
Vietnam has successfully attracted multi-national groups in recent years and the bustling M&A deals show that foreign investors have interest in the domestic Vietnamese market.
“I believe that the wave of multi-national companies flocking to Vietnam will continue for many years,” Morisset commented.
Le Hoai Quoc, chair of the HCM City Automation Association, said that the US government's giving priority to Vietnam in its strategy to develop supply chains will help Vietnam attract FDI.
However, Vietnam has weak points, especially in supporting industries and transport infrastructure. It needs to attract investments by improving the business environment, infrastructure, and administrative formalities.
Foreign enterprises are beginning to shift their investments into industries that require medium-level workers or higher-skilled workers as opposed to putting money into labour-intensive industries as in the past,
There is a new FDI capital flow heading for Southeast Asian countries, but analysts say it is not easy for Vietnam to grab the opportunities.