06:00 | 19/10/2021 Economy
(VEN) - Vietnam continues to yield positive results in attracting foreign direct investment (FDI) despite the resurgence of Covid-19 in the country and similar developments in other nations. However, to gain investor trust and welcome the shift in foreign investment flow, Vietnam needs to quickly control the pandemic.
HCMC production slumps
Due to the complicated developments of Covid-19, many factories have reported operation suspensions or capacity reduction in light of restrictions to contain the pandemic. The realized capital of FDI projects in August declined by 14.3 percent compared to the previous month and 12.2 percent compared to the same period last year. However, the figure recorded a slight increase in the first eight months of the year.
The most worrying issue is the ability of the manufacturing industry to sustain operations in the context of prolonged social distancing. Industrial production in Vietnam in August decreased by 11 percent compared to a year ago, with Ho Chi Minh City recording a slump of 51 percent.
The garment and textile, leather and footwear sectors have been strongly affected by the pandemic as most of their factories are located in the southeastern region. They have experienced supply chain disruptions, hampering production.
Mobile device assembly and production have not been as severely affected since most factories are located in the north, where production activities have gradually returned to normal. While supply chain shifts have temporarily stagnated, Vietnam remains an attractive investment destination.
Quick pandemic control needed
Nguyen Van Toan, deputy chairman of the Vietnam’s Association of Foreign Invested Enterprises, said Vietnam needs to quickly control the pandemic and speed up mass vaccinations. Toan also said suitable measures applied in pandemic-hit provinces are required to limit the risk to production chains.
Vietnam’s strong foundations and attractive investment incentives are important factors for retention of investors. Samsung is preparing to expand its mobile device factory in order to increase the production capacity for the Galaxy Z Fold 3 and Z Flip 3 to 25 million units a year, while the LG Display Vietnam Hai Phong Company Limited has raised its investment by US$1.4 billion in order to increase the output of OLED screens from 9.6-10 million units per month to 13-14 million products per month.
Prime Minister Pham Minh Chinh has asked ministries, departments and localities to adapt to life with the pandemic in the foreseeable future and find suitable ways to respond. This scenario greatly depends on Covid-19 vaccination in Vietnam.
Associate Professor Dinh Trong Thinh said the efforts of the government, ministries, departments and localities in Covid-19 prevention and control have generated investor trust. In the immediate future, Vietnam needs to control the pandemic as soon as possible and to create favorable conditions for enterprises to ensure business continuity, Thinh said.
|The Covid-19 pandemic has caused many countries to change their FDI attraction strategies, including Vietnam. In addition to creating a favorable investment environment, improving infrastructure and perfecting mechanisms and policies, Vietnam needs to identify sectors with advantages and potential to welcome the shift in foreign investment flow.|