Prime Minister Nguyen Xuan Phuc has decided to set up a special taskforce in charge of attracting foreign direct investment (FDI), which has changed its direction after Covid-19.

Deputy Regional Managing Director of the US-ASEAN Business (USABC) Council Vu Tu Thanh

The move has been described by Thanh as a ‘new push’ and the first action taken by the government to implement the Politburo’s Resolution No 50 on attracting FDI by 2030.

USABC is an organization representing 160 member corporations which have business activities all over the globe, the most of which are listed among 500 US leading companies named by Fortune.

The representative of USABC said not all investors leaving China will choose Vietnam. When leaving China, foreign investors will consider ASEAN and India for their next destinations.

The representative of USABC said not all investors leaving China will choose Vietnam. When leaving China, foreign investors will consider ASEAN and India for their next destinations.

India is a market with high competitiveness. ASEAN is also worth considering while Vietnam is seen as an important member economy which contributes to the growth engine of the entire ASEAN.

No single economy in ASEAN, however, is capable of replacing China to attract multi-national groups’ global supply or distribution chains.

If localities in Vietnam follow their own individual policy, investors will not organize production on a large scale to cut costs and increase competitiveness.

There are many factors that affect foreign investors’ decisions on whether to go to Vietnam.

Investors will pay attention to industrial zones (IZs), where they will set up factories.

The government’s Decree 82 on the management of IZs and economic zones (EZs) mentions the grading of IZs, assigning the Ministry of Interior Affairs. However, the IZ ranking is just the initiative of some localities such as Dong Nai, while the national criteria for ranking have not been set.

Vietnam has 374 established IZs and 259 unestablished IZs, but not all large multi-national groups will flock to Vietnam.

Thanh believes that it will be better for Vietnam to not only attract big investors, but also small and medium sized investors.

“Attracting several big investors is enough to be considered a great success,” Thanh said, adding that when big investors come to Vietnam, they will bring small and medium enterprises in their supply chains.

“Vietnam’s enterprises won’t be able to become first-class vendors for large groups immediately,” he explained.

In 2019, Vietnam’s FDI performance hit a decade-long high at around $38 billion pledged, according to the  Vietnam Investment Review. 

Chi Mai

Land price escalates on news about FDI 'wave'

“Someone said the land rent in IZs has surged to $150-200 per square meter. But rent of $100 is considered high already,” said Do Nhat Hoang, director of the Foreign Investment Agency (FIA).

What Vietnam needs to do to attract quality FDI after Covid-19

Speeding up infrastructure development and improving ease of doing business and vocational training are among things Vietnam can do to make itself more attractive to foreign investors post-Covid-19, according to VinaCapital.