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What are Vietnam's advantages in attracting foreign investment?

Vietnam has great advantages over its rivals to attract foreign investors, including low costs, an advantageous position, and stable exchange rate and institutional mechanisms.

Reports show positive signs in attracting FDI. The total newly registered and additional capital in the first four months of the year reached $9.8 billion, an increase of 32 percent over the same period in 2019.

 

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Song Than IZ

 


The FDI increased most sharply, by 244 percent in Ba Ria – Vung Tau, 65 percent in Long An, 60 percent in Binh Phuoc and 44 percent in Quang Ninh. Meanwhile, large industrial production centers witnessed an FDI decrease because Covid-19 made it impossible to carry out fieldwork and meetings with IZ developers.

The 45 percent decrease has been reported for HCM City, 67 percent for Dong Nai, 49 percent for Binh Duong, 78 percent for Hanoi, 67 percent for Bac Ninh and 81 percent for Hai Duong.

SSI Research, in its latest report, said Covid-19 has increased the need for diversifying production portfolio to avoid heavy reliance on one country, thus accelerating the process of relocating production from China to other countries.

SSI Research, in its latest report, said Covid-19 has increased the need for diversifying production portfolio to avoid heavy reliance on one country, thus accelerating the process of relocating production from China to other countries.


The ‘other countries’ with this potential in the region include Indonesia, Thailand and Malaysia.

Vietnam has an advantage over Indonesia in geographical position. As Vietnam is near China, it would be easier to transport goods.

Vietnam is a member of many FTAs, including EVFTA and CPTPP, while Indonesia is not. In terms of macroeconomic conditions, the Vietnam dong has been very stable in comparison with the Indonesian IDR.

SSI Research cited the figures as showing that the land rent in IZs in Vietnam is very attractive with rent that is 45-50 percent lower than in Thailand, Malaysia and Indonesia.

A Jetro report released in 2019 also showed that labor costs in Vietnam were also lower than the three countries.

Regarding the electricity price, according to the Electricity of Vietnam (EVN), it is equal to 80 percent of the electricity price in Indonesia, 42.1 percent in the Philippines, and 66.7 percent in Cambodia.

Vietnam has budgeted $20 billion for public investment this year. Meanwhile, $9.5 billion worth of undisbursed capital will be carried forwards to 2020. This means that Vietnam would disburse a huge capital of $30 billion this year for public investment.

A series of highways and other infrastructure projects, including the North-South Expressway, Bien Hoa-Vung Tau and Dau Giay-Phan Thiet Highway, will also help improve Vietnam’s competitiveness.

A report found that Vietnam had 335 IZs by the end of Q1 2020, or five IZs higher than 2019. Of these, 260 IZs with total area of 68,700 hectares have become operational and 75 IZs with a total area of 29,200 hectares are under construction.

Kim Chi 

 

Chance to boost FDI inflows to Vietnam

Chance to boost FDI inflows to Vietnam

With initial success in containing the novel coronavirus (COVID-19) and an advantage as a safe investment destination, Vietnam is attracting a shift of foreign direct investment (FDI) inflows.

Where will FDI head after leaving China?

Where will FDI head after leaving China?

Foreign investors are considering relocating their production bases out of China, and many of them are heading for Vietnam.

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