Focus on big investors making a difference
Focus on big investors making a difference
With the nation’s great demand for growth, Vietnam is boosting its group-oriented diplomatic activities in order to attract more investment and expand trade.
Tran Anh Vu, deputy general director of the Ministry of Foreign Affairs’ (MoFA) Department of General Economic Affairs, told VIR that in 2023, Vietnam will continue carrying out group-oriented diplomatic activities to lure in big projects worth billions of US dollars, in the context of increasing competition in luring this kind of funding in the region.
“Such activities will be implemented by the leaders of the country and of ministries and agencies,” Vu said. “Reality has shown that group-oriented diplomacy has been playing a key role in helping the nation to woo foreign direct investment (FDI).”
For example, upon hearing Denish toymaker Lego Group was looking for a suitable location to build a large-scale carbon-neutral plant overseas, the Vietnamese prime minister and one deputy prime minister had several talks on the phone with Lego’s top leader, persuading him to take the project to Vietnam.
“Vietnam has also been strongly improving its business and investment climate to attract more FDI,” Vu said. “In Southeast Asia, a number of nations such as Malaysia and Thailand are strongly deploying group-oriented diplomatic activities to woo such major groups as Lego, and this is creating big pressure for Vietnam.”
In November, construction of a $1-billion, 44-hectare Lego plant was commenced in the southern province of Binh Duong’s Vietnam-Singapore Industrial Park 3. The plant is scheduled to generate about 4,000 jobs and market its first products in 2024. This is the sixth plant worldwide for the Danish toy company, and its second in Asia. It is also Lego’s first carbon-neutral plant, using electricity from rooftop solar cell panels and a nearby solar farm.
Lego CEO Niels Christiansen said the group selected Vietnam for its big pool of skilled staff, commitment to carbon-neutrality by 2050, and location as gateway to the Asia-Pacific region, which boasts a growing market of young consumers.
Attracting interest
The Ministry of Planning and Investment last week reported that in the January-December 20 period of 2022, total newly registered and newly added FDI and capital contributions and stake acquisitions in Vietnam hit nearly $27.72 billion, equivalent to 89 per cent of that recorded in the same period last year. FDI disbursement reached about $22.4 billion, up 13.5 per cent on-year.
“Group-oriented diplomatic activities are making great contributions to Vietnam’s efforts in FDI attraction and trade expansion,” said Prime Minister Pham Minh Chinh at a recent conference on boosting economic diplomacy.
The MoFA has been assigned by the government to expand in these areas, especially given the restrictions of the past few years, and many big investors globally are seeking safe investment destinations. “Vietnam’s top leaders have also met with leaders of many groups, including Nike and Adidas. Visible outcomes have been seen through these meetings,” said Nguyen Hoang Phuong, a representative of the MoFA’s Department of Foreign Policies.
Established in 1995, Nike Vietnam now has more than 200 partner factories in 20 localities nationwide, along with hundreds of enterprises joining its supply chain, indirectly providing jobs for nearly 500,000 local workers.
PM Chinh received COO of Nike, Andy Campion, in Hanoi in December, proposing that the company increase scientific and technological advances and achievements of Industry 4.0 to its production and management activities in Vietnam, while assisting the nation to improve the management capacity, train human resources, boost green growth and digital transformation, and develop a circular economy.
Campion said the sportswear producer is expanding operations in Vietnam with enhanced application of technology and automation. Nike makes 600 million pairs of footwear each year, half of which are made in Vietnam, and that half of the materials for the company’s global supply chains are also sourced from here.
The MoFA will also continue working with many localities nationwide to connect them with foreign investors.
“For example, many South Korean investors are seeking locations in Vietnam for their upcoming projects, and we are introducing them with localities so that they can select the suitable places for the projects,” said a representative from the MoFA’s Department of External Relations. “The most recent is an event to promote South Korean investment in the south-central province of Binh Dinh, involving hundreds of South Korean investors seeking to invest in a wide range of sectors. In 2023, the MoFA will also continue cooperating with localities to organise FDI promotion events.”
The total accumulative registered capital from South Korea as of December 20 hit $80.97 billion, making the Northeast Asian economy the largest foreign investor in Vietnam, followed by Singapore at $70.85 billion and Japan at $68.9 billion.
Accelerating trade
In addition to helping attract FDI, the diplomatic sector has also assisted the country to expand trade. The MoFA has asked all embassies overseas to focus on solutions to increase Vietnamese exports to the markets where they are located.
The MoFA a few weeks ago submitted to the government for approval an international scheme on promoting Vietnam’s halal products in foreign markets. If the initiative is adopted, Vietnamese businesses will have a chance to expand exports with some incentives. It is calculated that the world’s halal market was valued at $2.23 trillion in 2020, which is expected to rise to $4.69 trillion by 2030.
“In addition, we are also help enterprises to export farm produce including tea into the Middle East market, and cashew to the African market,” said Nguyen Thanh Duy, a representative of the MoFA’s Department of Middle Eastern and African Affairs.
The General Statistics Office (GSO) last week reported that Vietnam’s total commodity export-import turnover hit $732.5 billion in 2022– up 9.5 per cent on-year. Of which exports are worth $371.85 billion – up 10.6 per cent, and imports are valued at $360.65 billion – up 8.4 per cent.
The MoFA cited high-profile international forecasts which stated that in 2022, the global economy is estimated to have grown only 3 per cent on-year due to instabilities from the global economy brought about by the Russia-Ukraine conflict and geopolitical tensions becoming increasingly complicate.
Investment and trade from the key markets such as the United States, the EU, South Korea, and Japan are estimated to have reduced in 2022, which will have strong negative impacts on Vietnam’s FDI attraction and trade activities in 2023, the ministry said.
Thus, one of the biggest tasks for the country now is to continue improving the domestic business and investment environment in service of investors and enterprises, while increasing the product quality to export to more markets based on advantages of free trade agreements already entering into force.
PM Chinh noted that Vietnam will continue diversifying export markets to offset ongoing difficulties in traditional ones, including the US, China, EU, Japan, South Korea, and ASEAN, and prepare for the global FDI shift to move up on the global value chains.
“Vietnam should be active in the search for international partners to attract FDI into many industrial sectors, especially high-tech, cultural industry, transport infrastructure, digitalisation, climate resilience, and education,” he said.
Minister of Foreign Affairs Bui Thanh Son also said that the economic diplomatic work has been deployed in a drastic, practical, and effective manner in order to expand trade and woo big investors like Lego and Samsung, which in December inaugurated its $220 million research and development centre in Hanoi. It is calculated that Samsung’s total investment in Vietnam reached over $20 billion by late last year.
“Despite negative impacts in the past couple of years, economic cooperation with partners have been maintained and expanded, with a rise in exports and consolidation of trust from the international business community, and increased attraction of FDI,” Minister Son added.
After growing 2.91 per cent in 2020 and 2.58 per cent in 2021, the Vietnamese economy climbed 8.02 per cent in 2022, and the rate is expected to be about 6.5 per cent in 2023, said the GSO.
