What do the FDI enterprises expect when they invest in Vietnam?

The FDI enterprises need to improve the workers’ skills so they can own and operate the automatic equipment.

Transparency - the key factor

Up to now, Vietnam has attracted 26,500 investment projects of foreign investors, with a total registered capital of $ 334 billion and total realized capital of $ 184 billion. In 2018 only, Vietnam has attracted more than $ 25 billion (not including more than $ 11 billion that was announced in the conference to summarize Vietnam's 30 years of FDI attraction last weekend).

Commenting on Vietnam's FDI attraction, Mr Bruno Angelet, head of the European Union delegation in Vietnam, said that after 30 years of rapid economic growth, Vietnam needed the capital resources with “higher quality", bringing more value to the country.

According to Mr Bruno Angelet, the current preference for FDI attraction in Vietnam is mainly focused on reducing tariffs, preferential interest rates and reduction of import tax, while the attraction of FDI capital is renewed with the demand of high technological level needing more sophisticated investment tools and policies. "Vietnam needs to continue to remove the current investment and trade barriers in parallel with improving business investment. In the current context, transparency is a key factor for investors to better understand the rules and procedures to be followed. The equitable, transparent, stable and predictable business environment is among the top priorities for EU investors," said Mr Bruno Angelet.

At the conference on summing up of 30 years of FDI attraction, Vietnam's investment environment is highly appreciated and emphasized that Vietnam has good opportunities in attracting foreign investors in the future, said Michael Kelly, President of the American Chamber of Commerce in Vietnam (Amcham), and also said that the business investment environment "should be fair and impartial", that the Investment Law is attached with clear provisions to ensure the interests of investors.

Representing the Korean FDI enterprises, Mr. Ryu Hang Ha, President of the Korean Business Association in Vietnam (Korcham) emphasized that Vietnam needs to improve the competitiveness of the business investment environment in the new context. "Vietnam should boldly invest in new infrastructure to get high quality activities and ensure human resources in science and technology. The investment environment with preferential tax is not enough. We look forward to a friendly comprehensive government policy where tax is only a small part. In particular, that administrative procedures are handled clearly, transparently and rapidly. For our investors, reliability is a top priority," said Mr Ryu Hang Ha. Accordingly, investors expect that before the promulgation of the legislation, all the contents should be clear, with specific arrangements to eliminate controversy. Enterprises want this incentive policy to remain stable to avoid insecurity, anxiety and expect the authorities to comply with the content of national commitments.

The domestic enterprises need better capacity

Mr. Tomaso Andreatta, Co-Chairman of Vietnam Business Forum (VBF), said that many FDI enterprises wish to expand their businesses in Vietnam, so the Vietnam Government needs to create more attractive investment environment by continuing to improve the business investment environment, balance and open the market. He said that FDI enterprises need the Vietnamese market, but also need a good production capacity. Accordingly, if there is no technology and infrastructure in the energy and transport sectors, Vietnam will not be able to attract new FDI capital resources. In addition, FDI enterprises need to improve worker’s skills so they can own and operate automatic equipment.

The domestic enterprises meeting the strict requirements of FDI enterprises in the supply of parts and accessories is also one of the issues mentioned in the past. On the one hand, there are many opinions that FDI enterprises have not really strengthened their connection with Vietnamese enterprises to support Vietnamese enterprises deeply involved in the value chain. On the other hand, from the perspective of FDI enterprises, the level of many domestic enterprises is a very important issue to promote this connection. At the Vietnam Business Forum (VBF) in 2018, Mr Tomaso Andreatta also said that a series of free trade agreements signed by Vietnam require high contributions from local resources, local producers must have a deeper level of engagement in the chain, not just at assembly level. Therefore, if the local businesses have better capacity, the FDI enterprises will be happy because the production will be much easier. "But if we can not buy raw materials on-site because local companies do not meet quality requirements, are not reliable enough or violate the business contract, that would be a serious problem," said Mr Tomaso Andreatta.

In addition, Tomaso Andreatta mentioned the inherent limitations of the legal system, particularly those related to high technology and intellectual property, emphasizing that FDI enterprises are not confidently transferring intellectual property here because of fear that it will not be protected, so investment will be very risky. Therefore, we need a mechanism of intellectual property protection to bring the best experts here to share our best production methods. So far, Vietnam has done very well in continuously attracting investment capital, but not the most advanced technologies," said Mr Tomaso Andreatta.

On this issue, many opinions suggest that, on the one hand, it is necessary to improve the resources and skills of domestic enterprises. On the other hand, the Government should encourage enterprises, especially large ones, to switch to modern industries with high technology to meet the requirements of FDI enterprises in the era of 4.0 industrial Revolution.