The world’s leading companies such as HP, Dell, Microsoft and Amazon have recently indicated plans to relocate most of their operations out of China. What should Vietnam do to drive the capital here?
Adam Sitkoff, Managing Director of Amcham
In fact, the relocation of production out of China has been carried out for many years since the production cost in the country has increased. Vietnam has taken full advantage of the relocation trend and it can continue to receive new higher-quality capital flow if the government takes more drastic actions to improve the investment environment.
There are many ways to improve the investment environment in Vietnam. Investors want to reduce the burden of tax compliance, continue to invest in infrastructure, especially energy and have progressive policies to promote the potential of the digital economy.
Large technology firms in the world need to see that the business environment here is encouraging renovation and creativity. They also consider productivity before making final decisions.
|Large technology firms in the world need to see that the business environment here is encouraging renovation and creativity. They also consider productivity before making final decisions.|
Studies have found that Vietnam’s education programs have become out of date, teachers have become overloaded with low salaries, and university graduates lack necessary skills. In order to attract investment, the government needs to take more drastic actions to modernize and upgrade the national education system, especially in higher education and vocational training.
Csaba Bundik, deputy chair of Eurocham
The US-China trade war is targeting the technology sector, which can be seen in US President Donald Trump’s sanction on the Chinese leading technology firm, Huawei. Therefore, if technology firms gather their production strength in the Chinese market, they would face high risks.
And it is now the right time for Vietnam to attract high-quality capital when the world’s technology conglomerates relocate their production bases.
Vietnam is just one of many investment points in ASEAN that European technology firms target to. In order to compete with other countries in attracting capital, it needs to accelerate institutional reform to create a more favorable business environment. Besides, Vietnam also needs to prepare high-quality human resources for multi-national technology conglomerates to recruit.
To Trung Thanh from Hanoi Economics University
The US-China trade war helps Vietnam attract two capital flows, from Chinese investors and from multinational companies which want to relocate their production out of China.
Vietnam, in the short term, will find it difficult to attract FDI into hi-tech fields and join more deeply into the global value chains because of some long lasting problems, including low productivity, skilled labor shortage, underdeveloped supporting industries and low national science & technology capability.
Vietnam needs to change its policies in attracting FDI by only offering incentives to projects using environmentally friendly technologies, helping put Vietnam into a higher position in the global value chain and contributing to sustainable development.
The average size of foreign direct investment (FDI) projects in Vietnam has sharply dropped amid a decline in investment flows.
Saying that there is no discriminatory treatment to investment sources, experts have stressed that Vietnam needs a tool to ‘filter’ capital to prevent risks.