Create its own attraction to attract FDI

	Vietnam attracted US$19.54 billion of FDI in eight months, decreasing by 14%
	173 billion USD is import-export turnover of FDI enterprises
	FDI inflows from Europe yet to shift into Vietnam

Policy stability is a prerequisite to attract foreign capital. Photo: ST

Opportunity

According to the United Nations Conference on Trade and Development (UNCTAD), the world's investment in 2020 could decline by up to 40%, while in Vietnam, as of August 20, 2020, the total FDI capital reached nearly US$20 billion, down 13% over the same period last year, which was a much lower rate than the world and regional countries.

In particular, the realized capital reached US$11.3 billion, down only 5.1% over the same period last year.

According to Do Nat Hoang, Director of the Foreign Investment Department, Ministry of Planning and Investment (MPI), these were positive signals, showing the confidence of foreign investors in Vietnam’s investment environment.

“The above figures showed that the Government of Vietnam has done well in improving the investment environment over the years and has been effectively implementing the "dual goal" of fighting the pandemic and boosting economic development. In particular, many international enterprises and corporations are interested in Vietnam, but due to the Covid-19 pandemic, they have organized online meetings and other channels to exchange and find information about Vietnam,” said Hoang.

Recently, a number of big projects worth from US$500 million to US$1 billion have been built and negotiated online. The project information and names of corporations have not been disclosed to ensure trade secrets for corporations and enterprises, however, this shows that opportunities for Vietnam to attract new huge projects are available.

Earlier, a report of the United States Agency for International Development (USAID) said that Apple began to move production out of China to Vietnam and increase its headphone production in Vietnam (about four million headphones were produced in the second quarter of 2020). Google and Microsoft are also moving some production lines from China to Vietnam, while the US has identified Vietnam as a priority partner in the supply chain. Panasonic will move its factory to Hanoi to set up the largest manufacturing center for washing machines and air-conditioners in Southeast Asia.

Along with the opportunities, USAID also pointed out that Vietnam would have to compete with many competitors in the region to attract this capital. For example, India has a large market with 1.3 billion people, a larger economic scale, a higher level of qualified human resources, especially Indian industrial engineers are the best in the world.

Indonesia, with a market size and economy size three times larger than that of Vietnam, the employees also have more competitive points and are more fluent in English, took actions such as tax reduction, commitment to land fund for investors, and commitment among senior leaders on improving the investment - business environment.

Need to create its own attraction

In the context of not much land and tax incentives to gain advantages, Vietnam needs to create its own attraction to attract FDI. That attraction, according to Dr. Nguyen Dinah Cong, is policy stability, because investors want stable policies and laws, specific legal documents, predictability during their implementation without unofficial fees.

According to Do Nat Hoang, the opportunities are great, but to be able to catch the investment wave in the right direction, coordination and participation of many ministries, central branches as well as localities, is essential.

“Vietnam has prepared necessary conditions to attract investment, such as clean land fund, electricity supply, high quality human resources, supporting industries and improving administrative procedures. Simultaneously, we are building special incentive packages applicable to large-scale projects with high-tech applications and high added value, to facilitate Vietnamese enterprises to participate in the value chain or achieve a high localization rate. The MPI has drafted these special incentive packages and asked for opinions of ministries and agencies before submitting them to the Prime Minister for consideration and decision,” said Do Nat Hoang.

At present, the Ministry of Planning and Investment, together with the Ministry of Natural Resources and Environment and localities, are reviewing delayed and ineffective projects to recover and create land funds to attract new investment projects; reviewing and building a list of localities, industrial parks and economic zones that have prepared infrastructure, human resources, and energy for immediately receiving projects in the flow of transformation and re-development; and reviewing and supplementing the industrial park planning to catch new FDI inflows.

While attracting high-tech-oriented projects, high-quality human resources are considered a limitation of Vietnam. To overcome this weakness, Nguyen Dinah Cong said it was difficult to meet this requirement in the short term, but in a specific investment project with a corresponding scale, investors must determine how many employees are needed and what they do, and then we can together with them design training programs for each project and each investor according to the package design method. So, investors' requirements can be resolved.

There has never been such a good opportunity to attract FDI capital as today

According to Nguyen Van Tan, Vice Chairman of the Vietnam Association of Foreign Investment Enterprises, who spent ten years working as a manager of a foreign-invested enterprise, said Vietnam's human resources were weak in discipline and stereotypical work. But in contrast, they worked flexibly, which was a potential strength of Vietnamese manpower in the context of the Fourth Industrial Revolution.