FDI attraction in Vietnam: It is ready to open the door for “Eagles”

High-tech production

VCN- The foreign-invested piece of bread post pandemic is not only reserved for Vietnam but also other competitors in the region that have been actively “preparing the nest” to welcome the “eagle”. Grasp the opportunities as soon as it starts, Vietnam has been preparing the favorable conditions not to miss such important capital investments.

Nowadays, a race to welcome foreign investment flows in some countries which are considered to have a lot of potential and advantages has become exciting. For example, the governments of India, Indonesia, Thailand and Cambodia have been actively preparing for incentives to attract shifting FDI capital.

That is to say, when Vietnam has a “golden opportunity” to attract FDI. Once it has considered FDI attraction one of the key frontiers for economic growth, Vietnam needs to take drastic and more positive actions with thorough preparation of institutions, infrastructure and human resources. In fact, from the start of the US-China trade war from 2019, especially after the pandemic in early  2020, Vietnam caught opportunities to attract FDI which moved out of China and is preparing to take advantage from this important investment.

Vietnam is developing a Public Private Partnership (PPP) Law, considered an institutional push in attracting investment, especially foreign investment. As soon as this law comes into effect, it will enable Vietnam to attract huge capital from the FDI sector allocating in large transport infrastructure projects, encouraging FDI investors to continue investing in Vietnam

High-tech production is an FDI attraction

In terms of institutions, the issue of Resolution No. 50-NQ / TW of August 20, 2019, on perfecting institutions, policies, improving effectiveness of water investment cooperation by 2030, laid a solid foundation for a complete institution for attracting FDI. The basic objective set out in the resolution is to perfect institutions and policies of foreign investment cooperation with competitiveness and international integration; meet requirements of renewing the growth model and restructuring the economy.

In 2020, in the heart of virus devastation, the Government issued an Action Program to overcome difficulties and seize opportunities of foreign investment cooperation. Accordingly, the Government requires agencies to perfect the institution to attract FDI. At the Government’s Standing Committee on prospects and solutions to attract foreign investment after the pandemic in late May, Prime Minister Nguyen Xuan Phuc decided to set up a special working group. This group is to deal with new investment waves when multinational corporations are speeding up the process of diversifying investment locations and relocating production facilities after the pandemic. In additions, the Prime Minister assigned the Ministry of Planning and Investment to draw up a scheme to attract FDI in the stage of post-Covid-19.

Dr. Phan Huu Thang, former Director of Foreign Investment Department, Ministry of Planning and Investment (MPI) said Vietnam’s FDI attraction policy was relatively complete. “Resolution 50 defines the policy, creates a basic premise and is also a basis to improve efficiency in attracting FDI. Changing and adjusting the investment structure, perfecting the legal system of policies in the direction of selectively attracting FDI are necessary things, especially in an increasingly complex international context.

Right now, it is necessary to outline specific plans soon, improve and soon implement the institutional mechanism and policies to attract FDI”. He emphasized that the resolution sets the goal of following high technology oriented industrial production, but to attract high technology, we must create adequate infrastructure in accordance with the action plans.

“We must set a specific plan in selecting projects and fields in accordance with the economic development program of each industry. Since then, it is necessary formulate a schedule to attract high-tech investment, set up a professional investment promotion program to choose the right partner, create favorable conditions from high-quality ground, labor to legal policies to ensure the success of the projects”, PhD. Phan Huu Thang emphasized.

Every resource well prepared

Preparing for FDI attraction is the key

According to the Association of Foreign Investment Enterprises, the Government should guide ministries, branches and localities, the Management Boards of economic zones and industrial parks (EZs, IPs) to prepare to meet the requirements of the large economic groups when moving factories to Vietnam. Especially, EZs and IPs must prepare land, technical infrastructure, information on renting, traffic conditions, and other necessary information as well as assure water and electricity systems, human resources for investors moving factories to Vietnam.

At the same time, the association said that it is necessary to public, transparent and simplify licensing procedures to shorten the time for appraising and issuing investment certificates, supporting investors to quickly deploy projects via the one door mechanism when carrying out construction procedures, environment certificates, and fire and explosion prevention.

Regarding land area for FDI attraction, the Ministry of Planning and Investment said there are 336 established industrial zones nationwide with total natural land area of ​​about 97.8 thousand hectares. Of which, 260 industrial parks have been put into operation occupying about 76.10% of total operating industrial parks. Besides, Vietnam now has 17 coastal economic zones with total land area and water surface of more than 845 thousand hectares. Thus, land fund to attract FDI is very convenient for localities to carry out clean land handover to FDI enterprises

To prepare facilities to receive FDI, from the end of 2029, many businesses have invested in developing industrial workshops and warehouses. For example, Becamex IDC Corporation and its partners have prepared infrastructure with nearly 4,000 hectares of industrial park land, 200 thousand m2 of ready-built factories for new investors. The localities that have advantages such as Ho Chi Minh City, Hanoi, Bac Ninh, Hai Duong and Binh Duong are urgently preparing infrastructure to attract FDI. In mid-May 2020, Long An province broke ground on two industrial zones, of which, Viet Phat Industrial Park with scale of 1,800 ha, is one of the largest industrial parks today.

Dr. Su Van Khuong, senior director of Savills Vietnam, said thanks to advantages of the facilitated infrastructure – seaport, road traffic system, waterway system and warehouse system, especially with the stable political system and one of the fastest economic growth rates in the world, Vietnam is always an attractive destination for FDI enterprises. The process of shifting manufacturing industries from China to Vietnam will take place as early as 2021, so itis high time for industrial real estate enterprises in Vietnam to prepare the warehouse system for the storage and delivery of goods in the supply chain.

According to a study by SSI Securities Company, comparing occupancy rates to industrial park renting cost in Southeast Asian countries in Q1 / 2020 shows Vietnam offers quite reasonable cost slower about 45-50% compared to the average rate of others such as Thailand, Malaysia and Indonesia. In terms of electricity price, Vietnam’s electricity price in 2019 reached 80% compared to Indonesia’s electricity price; 42.1% compared with Philippine electricity price and 66.7% compared with Cambodia’s electricity price.

Regarding human resources for FDI attraction, according to MPI statistics, FDI enterprises are creating jobs for nearly 4 million direct employees and about 5-6 million indirect workers. The participation in the activities of FDI enterprises has created a force of highly qualified and skilled technical managers and workers with access to modern science and technology. According to experts, to fully capable of meeting the requirements of the job, especially with Vietnam aiming to attract FDI in the field of high technology and source technology, the role of well-qualified human resources must pay fully attention to in the future.

“In the new context, it is recommended the Government raise the importance of investment in export processing enterprises because when choosing to build a factory in Vietnam, it is highly likely foreign investors will give priorities to export processing enterprise model in localities with advantages in traffic, facilities and labor resources. The Government should direct ministries to remove obstacles related to policies and laws on export processing enterprises to facilitate the new investment waves of large economic groups in the context that China is facing difficulties.”

(Proposals of the Association of Foreign-invested Enterprises).

Source: Customsnews

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