06:00 | 16/06/2020 Economy
(VEN) - Attracting foreign direct investment (FDI) is key to reviving the economy, Prime Minister Nguyen Xuan Phuc told participants at a recent conference in Hanoi themed “Working together, overcoming challenges, seizing opportunities, restoring the economy”.
Opportunities are there for Vietnam to attract investment shifted from China and other countries and territories
New investment wave
According to the Ministry of Planning and Investment, Vietnam attracted US$12.3 billion in additional foreign investment in the first four months of 2020, including almost US$2 billion worth of shares and capital of foreign investors, up 52.6 percent from the same period of 2019. With the Covid-19 pandemic under control in Vietnam, the country is expected to welcome about US$38 billion in FDI this year.
Dr. Phan Huu Thang, former Director of the Ministry of Planning and Investment’s Foreign Investment Agency (FIA), said ASEAN countries including Vietnam have become an attractive, safe destination for investors in the context of the increasing US-China trade war and the Covid-19 pandemic. Specifically, these two developments have disrupted supply chains from China of parts and components for electronics and auto and motorbike production, prompting investors to move factories from China to Southeast Asian countries, including Vietnam.
Among 122 Japanese enterprises surveyed in the first quarter of 2020, 62.7 percent said they would move their facilities from China to other countries. Of these, 42.3 percent said they would move to Vietnam, 20.6 percent have chosen Thailand, 18.6 percent are moving to the Philippines, and 16.5 percent to Indonesia.
According to Banjongjitt Angsusingh, Director-general of the Department of International Trade, the Ministry of Commerce of Thailand, 200 Thai businesses have researched investment opportunities in Vietnam, mainly in the fields of food and foodstuffs processing, consumer goods, and electrical household appliances.
American and EU enterprises have also increased their investment based on mergers and acquisitions (M&A) in Vietnam. According to FIA data, in the first four months of 2020, US businesses spent US$68.58 million on shares of enterprises in Vietnam, almost double that in the same period last year. Meanwhile, French investors spent US$27 million on M&A deals in Vietnam.
Ready to welcome shifted investment
According to Minister of Planning and Investment Nguyen Chi Dung, the time is now ripe for Vietnam to attract FDI, having proven itself a safe destination for investors and being ready to welcome investment shifted from other countries.
According to Hong Sun, Vice Chairman of the Korea Chamber of Commerce (KORCHAM) in Vietnam, investors from the Republic of Korea (RoK) and many other countries are expected to come to Vietnam despite the increasingly tough competition in FDI attraction among countries in the region, including Indonesia, the Philippines, and Thailand. To take advantage of this potential, Sun said, Vietnam must develop support industries to attract foreign investment. Businesses should also take the initiative in diversifying markets and changing supply chains to minimize or avoid dependence on a certain regional or country market and risks associated with supply chain interruption. Vietnamese businesses have opportunities to attract investment from developed countries with abundant capital and high technology, according to Sun.
Vietnam should promote quality investment projects, and negotiate with corporations that intend to move factories to the country in order to learn about needs and set investment attraction targets, Thang said.
Professor Dr. Nguyen Mai, Chairman of the Vietnam’s Association of Foreign Invested Enterprises (VAFIE) said Vietnam must move early and quickly. At the conference, VAFIE proposed that economic and industrial zones prepare land, infrastructure (including water and electricity supply) and human resources to welcome factories moving to Vietnam. The association also suggested investment licensing simplification, providing investors with a one-door policy application for their projects, and improvement of infrastructure (including energy), human resources and policies.