Change vision to catch high-tech investment flow

	UOB secures more than S$3 billion of FDI into Vietnam
	Businesses seek to boost investment in hi-tech field
	Disbursement of public investment capital: positively move but difficulties remain

The biggest bottleneck for Vietnam is not participating deeply in the processing and manufacturing industry and lagging behind other countries in the region. Photo: ST

Which sector is "lighting up" the economy?

According to Mr. Vu Tu Thanh, Deputy Regional Managing Director & Representative, US-ASEAN Business Council in Vietnam, after the Covid-19 pandemic, businesses will have chances from the trend of rearrangement of global supply chains and from export production under the EVFTA and RCEP.

In which, a series of commodities see strong growth related to supporting industries and e-commerce, electronic products.

“We need to take advantage of international economic integration and global supply rearrangement, especially pay attention to investing more in electronics, e-commerce and supporting industries which are lighting up the economy,”said Thanh.

Mr. Nguyen Van, Vice Chairman of the Hanoi Supporting Industries Business Association (Hansiba), said that Vietnam has many opportunities to receive foreign direct investment shifts as well as increase sustainabilityfor the connection chain.

Mr. Nguyen Van added that amid the gloomy global economy, Vietnam’s macro-economic indicatorsstill show plenty of room to do better. Through the effectiveness of 13 bilateral and multilateral Free Trade Agreements (FTAs); the signing of the Regional Comprehensive Economic Partnership (RCEP) agreement on November 15, 2020 in Hanoi; ongoing negotiations of two FTAs, Vietnam is one of the most open economies in the world, creating a great opportunity to develop a new supply chain.

Regarding investment attraction, in the first six months of 2020, FDIin Vietnam reached nearly US$16 billion, down 15% year-on-year but it is still better than the average drop of 30-40% of countries in the world in 2020.

This is a rather better initial result than others in the world, providing leverage for Vietnam to reverse from the negative influence of the Covid-19 pandemic.

The key is human resources and infrastructure

As an area that is forecasted to have many opportunities to catch the investment wave from Europe in the future, electronics and supporting industries are making good preparationsto exploittheir advantages.

According to Nguyen Van Toan, Vice Chairman of Viet Nam Association of Foreign Investment Enterprises, European investment flows are mainly from businesses using high technology but low labor costs.

Therefore, to catch the investment wave from Europe, Vietnamese businesses need to change their vision. Because most Vietnamese businesses, especially small ones, have a short-term vision. Therefore, they have to struggle withthe lives of their officers and workers. Another weakness is that we currently depend too much on a market for raw materials and semi-finished products. If we can solve those problems, I think we will seize opportunitiesfor development.

According to Mr. Nguyen Van, to seize opportunities, businesses need to focus on two factors: training of high-quality human resources and connecting infrastructure. In addition, ministries, agencies and local authorities should identify strategic priorities, create policy frameworks, and improve the business investment environment; and enhance the role of associations such as Vietnam Association of Supporting Industry (VASI) and HANSIBA in the connection of businesses.

Ms. Do Thi Thuy Huong, Executive Board Member, Vietnam Electronics Industries Association (VEIA), said that in the past five years, the electronics industry saw agrowth rate from 18-22% per year and recorded a large trade surplus, compensating for the country's export turnover. Before the wave of supply chain shifting, many global electronics businesses came to Vietnam. However, this is also a challenge because we do not have core businesses to supply components and accessories for the whole processto major manufacturers in the world. Moreover, the reality is that Vietnamese workers only meet the standards of cheap labor and need engineers to create higher value.

“In Vietnam, joint-training programs in schools are not suitable and sufficient to create good engineers. Training programs are still more theoretical than practical on machines, or there are practices on old machines and technologies. These factors are making it difficulties for component manufacturers and technology businesses in Vietnam in competition,” Ms. Huong said.

European companies bring high skills and international experience on organization and technology to Vietnam, and European FDI comes with high standards of corporate social responsibility in protecting and training workers and employees, as well as respecting and protecting the environment. Therefore, in order to catch the investment capital from European businesses, electronics and supporting industries businesses will have to focus on changing from the first core factor of human resources. Thereby, Vietnamese businesses, including the electronics and supporting industries businesses, can be proactive and willing to participate in global supply chains.