Vietnam warned about Cambodia as a rival in attracting FDI

Vietnam warned about Cambodia as a rival in attracting FDI

The infrastructure system situation in Vietnam is believed to be equal to that in Cambodia and Laos. But Vietnam has bigger problems in corruption and law burden.

Vietnam has more rivals in attracting FDI

The information was released at the ceremony on announcing the 2013 provincial competitiveness index (PCI) held by the Vietnam Chamber of Commerce and Industry (VCCI) on March 20.

Instead of the usual question--why investors decided to make investment in Vietnam and the localities, VCCI this time has requested the investors to compare the Vietnamese business environment with the other countries which they once planned to go to.

Fifty-four percent of foreign invested enterprises, before deciding to come to Vietnam, once considered investing in some other countries, including China (11 percent), Thailand (10.6 percent) and Cambodia (7.7 percent).

Vietnam is no longer the most favorite destination for foreign investors like it was in 2007-2010. It now has to compete with the other strong rivals in the region, including China, Thailand, Indonesia, and the newly emerging countries such as Laos, Myanmar and Cambodia.

Foreign invested enterprises (FIEs) noted that the Vietnamese business environment is less attractive than others because of the high underground fees, administrative procedure and law burdens, low public service quality (education, healthcare) and the poor infrastructure.

Cambodia – a redoubtable rival

Vietnamese now feel worried about the strong rise of Cambodia, the neighbor, which was believed to be inferior to Vietnam in many fields.

The list of the business fields in which Cambodia has greater advantages than Vietnam has been prolonged.

Another inferiority of Vietnam has been added into the list when the investors in the PCI survey said the administrative procedure and law burden is heavier in Vietnam than in Cambodia.

Prior to that, the public was stirred up by the information that Vietnam, which has been trying to develop the automobile industry for the last tens of years, has lagged behind Cambodia, which is believed to have lower technologies.

Cambodians have announced they have successfully made electric cars monitored by smart phones. Especially, the car is very cheap, priced at $5,000, or VND100 million.

Meanwhile, Vietnam still cannot develop its automobile industry after tens of years of investments. Madaz and Ford, the world’s big automobile manufacturers, have canceled the big investment projects they intended to develop in Vietnam because they could not find the car parts and accessories needed for the assembling in Vietnam.

Vietnam is also believed to lag behind in the rice production. Cambodia has recently announced that it would penetrate the US and South Korea, well known as choosy markets.

While Vietnamese rice has been left unsold, Vietnamese merchants have been hunting for Cambodian rice because of its low price.

Nguyen Van Luc, a farmer in Can Tho City, said Cambodian rice, made of high yield varieties, has been bought at VND4,500-5,000 per kilo, much lower than the Vietnamese high quality and fragrant rice prices.

A recent report by the Ministry of Industry and Trade showed that the Vietnam’s exports to Cambodia in January 2014 decreased sharply from that in January 2013.

vietnamnet