Vietnam - Destination of high-quality FDI capital flows

VTV.vn - European, Japanese and Korean businesses all highly appreciate Vietnam's efforts in reform, digitalization and infrastructure development.

European businesses optimistic about business prospects in Vietnam

The European Chamber of Commerce in Vietnam (EuroCham) has just announced that the Business Confidence Index in the third quarter increased to 66.5 points, reaching its highest level in the past 3 years. This reflects the clearest optimism of the European business community, as this index surpassed the threshold recorded before the US reciprocal tariff imposition period.

EuroCham believes that, despite being affected by global fluctuations, the trend of shifting supply chains away from Vietnam remains very low, with only 3% of businesses considering adjusting operations outside of Vietnam, while another 3% are considering expanding or adjusting operations within the country. This shows that Vietnam remains a reliable and sustainable production and investment destination in the regional value chain.

Mr. Dirk Siegeried Hartmann - General Director of Tesa Site Hai Phong Company said: "We chose Vietnam and Hai Phong city to invest because of its strategic location advantages and advanced infrastructure. The Vietnamese Government's commitment to a transparent business environment and the simplification of legal procedures has increased investor confidence."

Despite being affected by global fluctuations, the trend of shifting supply chains away from Vietnam remains very low. Illustrative photo.

FTSE Russell's upgrade of Vietnam's stock market from "frontier" to "secondary emerging" is also seen as a factor strengthening confidence with European investors. This business confidence also goes hand in hand with Vietnam's growth plan. Nearly half of European businesses in Vietnam participating in the survey believe that Vietnam will achieve its GDP growth target of 8.3 - 8.5% this year.

Mr. Maros Sefcoviec - High Commissioner for Trade of the European Union assessed: "The EVFTA has strengthened Vietnam's position as an attractive investment destination, promoting FDI flows from Europe. EU businesses said they are clearly benefiting from tax cuts, market expansion and increased competitiveness. After 5 years of implementing the EVFTA, both Vietnam and the EU are making efforts to diversify and expand business cooperation opportunities."

However, administrative procedures are still something that European businesses want Vietnam to further reform. According to EuroCham, up to 65% of businesses reflect that administrative procedures are still quite complicated, especially the VAT refund process and the lack of consistency in granting work permits between localities.

If this is improved, with a stable investment environment, large market potential and a commitment to deep integration, Vietnam will maintain its position as a promising investment destination in the eyes of the Vietnamese European community.

To better understand the driving forces behind capital flows from Europe into Vietnam, as well as the expectations and strategies of European businesses in our country's market in the coming time, VTV reporters had an interview with Mr. Torben Minlo - Member of the Executive Board of EuroCham Vietnam.

80% of European businesses have expressed optimism about the business prospects in Vietnam in the next 5 years. Responding to the reasons for European businesses to maintain this optimism, Mr. Torben Minlo said that one of the factors driving this optimism is that Vietnam's economy in the first three quarters of the year was very good, with an impressive GDP growth rate. There are currently many reforms being implemented by the Government and European investors see these as positive reforms, helping the investment process take place faster and more smoothly.

In addition, it is clear that a strong trend of digital transformation is taking place in Vietnam from the banking sector, private enterprises to manufacturing. This digitalization process will be an important foundation to attract more international investors in the future.

Vietnam has now become part of the global supply chain, emerging as a top destination thanks to its political stability, good investment disbursement rate and dynamic economy.

"Overall, I can say that Vietnam is doing very well and if everything continues to go in the right direction, Vietnam's future will be very bright," Mr. Torben Minlo assessed.

So what mechanisms, policies or breakthrough solutions does the European business community hope to see from the Vietnamese Government to continue promoting high-quality investment flows?

According to Mr. Torben Minlo: "We appreciate Vietnam's flexible and balanced foreign policy in the context of complex world geopolitics. Foreign investors coming to Vietnam not only want to export to Europe but also to the US and many other markets and Vietnam is doing very well in maintaining bilateral relations with these partners."

In terms of areas for improvement, especially for European investors, sustainable development and training of high-quality human resources are top priorities. Investors are now always looking for “green” investment opportunities. If Vietnam accelerates the process of greening its economy and prepares good human resources, it will certainly attract more European investment capital in high-tech and sustainable investment.

"In addition, we hope to have a "one-stop" mechanism - meaning that when we come to Vietnam, we can present our investment plans, and procedures will be processed quickly to put them into operation soon. If Vietnam continues to do well with these reforms, we have high expectations for breakthrough results in the future," said Mr. Torben Minlo.

Administrative reform creates confidence for investors

Not only European enterprises, large investors from Japan and Korea have also given very positive assessments of the investment and business environment in Vietnam in recent times, shown through specific figures such as FDI attraction in the past 9 months reaching over 28.5 billion USD, an increase of 15% over the same period last year.

One of the factors that have brought success mentioned by foreign investors in recent days is the consolidation and expansion of development space of localities, helping to increase infrastructure connectivity and resource sharing. The formation of "super localities" has also created growth poles with larger economic scale. For example, Ho Chi Minh City has led the country with a total registered FDI capital of 4.8 billion USD. Followed by Bac Ninh and Hanoi.

In the first nine months of this year, the processing and manufacturing industry continued to affirm its position as the main driving force, attracting the majority of FDI capital flows into Vietnam. Illustrative photo.

A Korean investor has just decided to invest an additional 50 million USD to build additional ancillary facilities for its project, thereby raising its total investment capital in Vietnam to nearly half a billion USD.

According to business representatives, the merger of Hai Duong with Hai Phong has opened up many opportunities and favorable incentives for businesses to expand production and business.

Mr. Yang Chul - General Director of Hyundai Kefico Vietnam Company said: "After the merger, the enterprise will enjoy special preferential policies and mechanisms given by the Central Government to Hai Phong City such as taxes, investment conditions... The digitization of administrative procedures in Hai Phong City is doing well, I also expect that enterprises will shorten a lot of time and save costs".

The creation of larger localities after mergers and the simplification of administrative procedures… have given Vietnam more opportunities to make the shift from attracting FDI capital through low costs to attracting capital through institutional foundations and management capacity. According to the Japan External Trade Organization (JETRO), 62% of surveyed enterprises rated the investment environment and growth potential in Vietnam as very high, far exceeding the ASEAN average, thanks to reform efforts.

Mr. Haruhiko Ozasa - Chief Representative of the Japan External Trade Organization in Hanoi assessed: "These reforms are necessary for Vietnam as the country aims to become a high-income country by 2045. By improving business productivity through restructuring administrative agencies, positioning the private sector... as the main growth engine promoting innovation and international integration, Vietnam is building a solid foundation for sustainable and long-term growth".

This reform vision of Vietnam is also highly appreciated by the World Bank. "The Vietnamese Government aims to cut and simplify at least 30% of unnecessary business conditions, shorten the time to process administrative procedures by 30% and reduce compliance costs for businesses by 30%. This is a positive signal to attract more FDI. Despite the uncertain global context, FDI disbursement in Vietnam remains resilient, increasing by over 9% this year," said Mr. Sacha Dray - World Bank Economist in Vietnam.

In addition, the fact that FDI projects have increased capital since the beginning of the year by nearly one and a half times compared to the same period last year and the capital contribution/share purchase by foreign investors has also increased by nearly 35% shows that existing projects, after a period of successful business, have decided to significantly expand their scale, demonstrating the strong confidence of international investors in the investment environment in Vietnam.

Continue reforms to attract high-quality FDI

In the first 9 months of this year, the processing and manufacturing industry continued to affirm its position as the main driving force, attracting the majority of FDI capital flows into Vietnam, in line with Vietnam's strategic orientation of selectively attracting high-quality FDI... This is the spirit running through Resolution No. 57 of the Politburo on breakthroughs in science and technology development, innovation and national digital transformation. It is also the basis for the Government, ministries and localities to build unique and outstanding mechanisms.

In less than 3 years, a large-scale lithium battery factory will be built on an area of ​​nearly 9 hectares in Yen Lu Industrial Park, Bac Ninh province. This is the third factory of a foreign enterprise in the industrial - high-tech capital of Vietnam, creating a strategic step to access the global market.

Mr. Ly Duy Nang - Deputy General Director, Sunwoda Vietnam Co., Ltd. said: "Increasing investment in Bac Ninh is necessary for the company's strategic development. During the investment process, the local government has responded very positively and provided a lot of support in policy consulting, licensing, land leasing and quick handling of procedures".

According to the Management Board of Industrial Parks of Bac Ninh province, synchronous infrastructure and promoting administrative reform are key factors for success in competition to attract investment. Planning and digital transformation are also considered by the locality as important levers to welcome high-tech capital flows.

Not only Bac Ninh, Phu Tho, Hanoi and many other localities are also proactively unlocking potential, aiming to attract high-quality FDI. After the merger, localities are given more power and are more proactive in removing obstacles for businesses. This helps committed capital quickly turn into implemented capital.

Along with local efforts, central ministries and branches are also focusing on reform, creating a clear, transparent legal corridor and adapting to international practices. For example, from October 15, Vietnam officially applied the Global Minimum Tax according to Decree No. 236 of the Government, which is an important step in international economic integration.

Many important laws related to Land, Minerals, Bidding, etc. have also been amended and supplemented by competent authorities to suit objective reality and facilitate production and business, to be submitted to the National Assembly for consideration and approval in the session scheduled to open early next week.

Efforts to improve the investment environment and facilitate production and business are not only the work of the Government, ministries and branches, but also require consensus and determination at every level. An open, competitive, transparent and sustainable investment environment will be the key to retaining and attracting more technology "eagles", thereby opening a new phase in attracting high-quality FDI capital to Vietnam.

Source: https://vtv.vn/viet-nam-diem-den-cua-dong-von-fdi-chat-luong-cao-100251018053937917.htm