Vietnam is ready to welcome FDI shift from China
Vietnam is ready to welcome FDI shift from China
Vietnam has maintained its reputation as a safe investment destination, placing it at an advantage to attract investment shifted from China in the wake of the Covid-19 pandemic and international trade tensions.
Hoya, a Japanese manufacturer, is likely to leave China for Vietnam, where the company runs two factories. Japan’s Ministry of Economy, Trade and Industry (METI) announced that Hoya is one of the 87 Japanese companies to receive the Japanese government’s support in moving their factories out of China.
Vietnam is expected to attract a new wave of high-quality foreign investment soon. Dr. Vu Tien Loc, Chair of the Vietnam Chamber of Commerce and Industry (VCCI), said Japanese businesses are still optimistic about investment opportunities in Vietnam. Half of the 30 Japanese enterprises, which have applied for the Japanese government’s support to shift supply chains from China to Japan or another country, have chosen to relocate their factories to Vietnam. US businesses are interested in major infrastructure, green energy and digital economy projects in Vietnam.
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Professor, Dr. Nguyen Mai, Chairman of the Association of Foreign Invested Enterprises (VAFIE), said that along with India and Indonesia, Vietnam is emerging as one of the three preferred destinations for capital movement waves, and a number of factories have been moved from China to Vietnam in the past two years. Besides small and medium foreign invested enterprises in Vietnam that are continuing to grow, world-leading economic groups will invest in projects worth billions of US dollars in Vietnam in the fields of high-tech industry, future technology, smart city construction, and technical and social infrastructure, Mai predicted.
Despite the Covid-19 pandemic, according to the Ministry of Planning and Investment, Vietnam attracted an additional US$26.43 billion in registered foreign direct investment (FDI) capital from January 1 to November 20.
Vietnam’s advantages
According to the ministry, while the crisis is boosting global production restructuring, Vietnam is considered a priority destination for leading enterprises from the US, Japan, and the Republic of Korea (RoK).
Vietnam has been highly rated for its political stability, abundant human resources, potential market, competitive production costs, favorable geographical location, and broader and deeper integration into international economic communities. Free trade agreements (FTAs), including the recently signed EU-Vietnam Free Trade Agreement (EVFTA), have made Vietnam more attractive to foreign investors.
Don Lam, CEO and Founding Partner of Vinacapital Investment Management Ltd. said the government should continue to speed up infrastructure development. Construction of deep-water ports next to industrial zones will solve problems related to import of raw materials and export of finished products, Don Lam said. Industrial cluster models, he said, would create dual benefits while maximizing the value of FDI and reinforcing investor confidence in adding value to products. While investors love tax reductions, tax incentives are not so necessary to attract FDI, he said. Vietnam needs to be proactive in choosing the right capital flow instead of waiting for capital to come, Don Lam said.
| Vietnam has become an attractive destination for foreign investors, as it has a skilled workforce, convenient logistics system, flexible legal environment and stable macroeconomic prospects. |
