Paving the road for a competitive economy
Paving the road for a competitive economy
US investment in Vietnam kept its strong pace in 2019, and is expected to rise further on the back of business improvements and the country’s developments on emerging technology rules. Adam Sitkoff, executive director of the American Chamber of Commerce in Vietnam, talks about US business prospects and future plans towards reaching Vietnam’s digital economic goals.It has only been 25 years since Vietnam and the United States restarted their commercial relationship.
What started out a quarter of a century ago with $220 million in annual trade has grown to over $60 billion today. The US is Vietnam’s largest export market, while Vietnam is one of America’s fastest-growing markets worldwide. American companies want to sell more to this country and the Vietnamese government needs to help make that happen.
American companies have invested billions of dollars here, integrating Vietnam into the global supply chain, creating jobs and helping the country become more productive, efficient, safer, and cleaner.
It is important to note that while Vietnam’s official investment statistics rank the US quite low, the truth is that the US is one of the top investors in Vietnam. The misunderstanding comes from complicated US tax laws and corporate structures that utilise global supply chains and systems.
For example, Intel’s $1 billion assembly facility in the Saigon High-tech Park is an investment made through Intel Hong Kong, so this counts as a Hong Kong investment even though Intel is an American company. Another example is P&G’s $100 million factory in the southern province of Binh Duong, which is an investment made through P&G Singapore, classing this as a Singaporean investment even though P&G is a famous American company.
There are many examples like this. The US is one of the top investors here and Americans are in Vietnam selling cosmetics, soft drinks, cars, aircraft, software, industrial goods, educational services, mobile applications, financial and legal services, agricultural products, and so much more.
Inconsistent regulatory interpretation, irregular enforcement, and unclear laws remain significant challenges for many US companies here and AmCham continues to work with our partners in the Vietnamese government to address the areas where inconsistencies, inefficiencies, and unfair practices persist.
The best way to help balance the US-Vietnam trade relationship is to improve the business environment in Vietnam and reduce the risks and burdens that American companies face here.
Our companies need an equal, level, and predictable playing field as a solid foundation, not only to attract new investment but also to maintain and grow the investment that is already here.
We live in a competitive world. Right now, almost every country in the region is working to grow a modern economy, which will attract future investment and high-paying jobs for their people. For Vietnam to be successful, non-productive red tape must be controlled and the country’s regulatory framework must be stable and predictable.
American investors remain optimistic about business prospects in Vietnam. However, we are concerned with recent changes in policy and regulations, which are not consistent with international best practices.
These changes expose many investors to considerable risks and obstacles in executing their investments.
AmCham continues to encourage continuous improvements in infrastructure development, protection of intellectual property, education reform, legal and tax policy certainty, and enhanced transparency in Vietnam. Progress in these areas will not only help attract US investment but will also support Vietnam’s aspirations to propel itself to the next sphere of economic competitiveness.
US companies also want to see a progressive policy approach by the government to unlock the full potential of the digital economy here because, in today’s world, you cannot separate the digital economy from the real economy. The digital economy significantly reduces costs, provides products and services to a broader range of consumers, and increases access to newer and bigger markets.
We look forward to working with Vietnam’s leadership as it pursues its digital economy goals and our companies stand ready to provide expertise as Vietnam develops rules on emerging tech like e-payments, digital content, AI, and smart cities.
