With recent movements in Taiwanese investment, Vietnam is seeking to attract more high-quality capital flows for the economy in alignment with the country’s new foreign direct investment attraction strategy.
Recently, Tai Hung Yi, supervisor and deputy general director for Vietnam of the Taiwan Chinese National Federation of Industries, and Zeng Hsien Chao, economic division director of the Taipei Economic and Cultural Office in Vietnam, met with Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), to discuss future co-operation potential between Vietnamese and Taiwanese businesses.
Yi and Chao informed that Taiwanese investors will continue to focus their investment in industries such as tourism, and textile and garments in the Southeast Asian nation.
Meanwhile, Loc said that Taiwan is one of the economies which lead in innovations and development of small- and medium-size enterprises while Vietnam is targeting foreign direct investment (FDI) inflows with higher quality and added value.
“We hope that future Taiwanese investment will be more in line with Vietnam’s development demands in the new era,” Loc said.
In 1989, Taiwan became the first foreign investor in Vietnam, and the two economies’ investment ties have since been strengthened. Taiwan is Vietnam’s essential business and investment partner, ranking now the fourth-largest foreign investor in Vietnam with a total of 2,645 projects registered at $31.9 billion, according to statistics from Vietnam’s Ministry of Planning and Investment (MPI).
Taiwanese investment in Vietnam has tended to increase in recent months, partly driven by the trend of shifting capital to countries in the ASEAN region, including Vietnam. Many factors have added attraction to Vietnam, such as the stable political situation and economic growth, the improved business climate and infrastructure, administrative reforms, an increase in trained workforce, and the increasingly deep global integration by the country’s signing of bilateral and multilateral free trade agreements.
Statistics show that in the first half of the year, Vietnam attracted $783.4 million from Taiwan, up from $318.37 million in the same period last year. The increase was attributed to growth in stake acquisitions value, which reached $268.09 million, $311.83 million worth of newly total registered capital, and $203.48 million worth of added capital.
Taiwanese companies have mainly invested in the manufacturing sector, accounting for 88 per cent of total Taiwanese investment in Vietnam. The other sectors are construction, real estate, and agriculture-forestry-fishery. However, Taiwanese-invested agricultural projects in Vietnam are of a small scale with a limited number of hi-tech projects.
Taiwanese projects are located in 55 cities and provinces across Vietnam. Most of the Taiwanese investment goes to the central province of Ha Tinh, Ho Chi Minh City, the southern provinces of Binh Duong, Dong Nai, Ba Ria-Vung Tau, and Long An, as well as Hanoi and the northern provinces of Ninh Binh and Bac Ninh.
Recently, Taiwanese investors with strong expertise in hi-tech and mechanics are looking for opportunities to expand to Vietnam to meet the country’s growing demands in line with Industry 4.0.
Taiwan has many famous brands in the hi-tech and innovation sectors. For example, in electronics there are Foxconn and Asus, which have a positive market share in Vietnam.
In its orientation, Vietnam will focus on the sectors in which Taiwan has strong expertise to meet the country’s social-economic development. Particularly, the country aims to attract more high-quality investment from Taiwan’s powerful groups which have advanced and environmentally-friendly technology, high-added value, and energy-saving projects.
In an upcoming investment promotional trip in Taiwan, Vietnam aims to call on Taiwanese companies to invest in the sectors that it is giving priority to, such as mechanics, electronics, and manufacturing of spare parts for the textile and garment sectors.
The orientation in Taiwanese investment attraction is in line with the draft new foreign direct investment (FDI) attraction strategy for Vietnam, which is expected to be approved soon by the Politburo. Accordingly, the country will change its FDI strategy orientation and investment incentives towards focusing on output quality and contributions to the domestic sectors. These include the value chain, added value, application and transfer of hi-tech, research and development, and innovation, rather than the previous focus on location, sectors, and investment scale.
In addition, Vietnam will also concentrate more on financial supporting policies, for example, the incentive policies on the lending rate and trading rights, instead of only focusing on the incentives on tax and land as it does currently.
As part of the strategy, not only making the changes in investment orientation and incentives, Vietnam will now also take a new approach in investment promotion towards being more active to increase efficiency amid the influence of the ongoing Industry 4.0. For example, FDI promotion activities can be carried out online on e-portals to help investors access information in a timely and rapid manner.
A senior MPI official said, “We will also focus on the upscaling the capacities of staff to meet strict requirements. Moreover, the sense of initiative among government agencies and local authorities has increased, thus enabling the country to welcome new FDI waves amid global and regional mounting competition.”
During the investment promotion event in Taiwan, there will be five seminars and forums, as well as a number of business-to-business meetings, attracting the participation of hundreds of Vietnamese and Taiwanese companies, as well as Vietnamese localities. VIR