24/05/2024
Vietnam is facing significant opportunities with the wave of FDI expansion into Southeast Asia. However, experts note that labor quality, logistics, and the legal environment remain the three main bottlenecks in attracting foreign investment into Vietnam...
As of February 20th, foreign capital inflows into Vietnam remain positive, reaching nearly 4.29 billion USD, an increase of 38.6% compared to the same period last year. Efforts to promote investment and improve the business environment have yielded results. Additionally, Vietnam is benefiting from the wave of investment expansion into Southeast Asia by enterprises.
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According to a recent survey by AmCham (American Chamber of Commerce) in China, 60% of American companies are increasingly concerned about bilateral tensions, and over 40% have responded that they are seeking to increase investment to strengthen supply chain resilience. More than 50% indicated that Southeast Asia remains the top destination for redirecting investment from China.
On the other hand, a survey by EuroCham (European Chamber of Commerce) also shows that European companies operating in China will continue to review their supply chain strategies with ASEAN, as it is considered the top destination for investment relocation strategies.
In Vietnam, according to the Foreign Investment Agency of the Ministry of Planning and Investment, from the beginning of this year until February 20, 2024, Vietnam attracted 4.29 billion USD in foreign direct investment (FDI), an increase of 38.6% compared to the same period in 2023.
The export turnover of the FDI sector also increased significantly in the first two months of 2024. Specifically, the export turnover including crude oil is estimated to reach over 48.87 billion USD, up 29.8% over the same period, accounting for 72.9% of the country's total export turnover. Excluding crude oil, the export turnover reached 48.57 billion USD, up 30.1% over the same period, accounting for 72.5% of the country's export turnover.
Despite the promising prospects from attracting FDI, according to Mr. Tim Evans, CEO of HSBC Vietnam, Vietnam also needs to identify the obstacles and bottlenecks in attracting foreign investment and find ways to remove them.
First is the quality and accessibility of the labor force. Vietnam needs to continuously improve productivity as it still lags behind major countries in the region in terms of labor productivity, with relatively low output per working hour. Data from the Asian Productivity Organization (APO) shows that in 2020, the output value per working hour of a Vietnamese worker was only 6.4 USD, compared to 14.8 USD in Thailand and 68.5 USD in Singapore.
Second is Vietnam's logistics performance index, which lags behind China, Malaysia, and Thailand, with many deficiencies in logistics capacity, delivery times, and traceability.
“Vietnam's logistics infrastructure does not meet international standards, and road transport accounts for up to 74% of total transportation. Meanwhile, the demand leans towards maritime transport and seaports to support exports,” added Mr. Tim Evans.
Third is the legal environment. The HSBC Global Connection survey indicates that legal changes are one of the two biggest challenges for foreign businesses operating in Vietnam. Among them, 30% of companies face difficulties adapting to rapidly changing policies and regulations.
In addition to removing bottlenecks in attracting FDI, according to Mr. Tim Evans, Vietnam needs a strategy to attract more FDI, starting with understanding and grasping the competitive situation between Vietnam and other ASEAN countries.
For example, Singapore and Malaysia are the two Southeast Asian markets leading the semiconductor ecosystem. Singapore is a hub for semiconductor wafers and manufacturing equipment, while Malaysia is a center for packaging and testing.
The CEO of HSBC Vietnam noted: “Vietnam is also gradually venturing into both the electric vehicle and semiconductor markets. Accordingly, Vietnam should aim to increase its focus on high value-added goods while continuing to maintain its performance in attracting large electronic manufacturers to enter the market. Vietnam has the advantage of competitive pricing, consistent government support, many effective FTAs, and the hardworking attitude of the Vietnamese people.”
**DYNAMIC FDI ATTRACTION INTO THE SOUTHERN KEY ECONOMIC REGION**
According to the Foreign Investment Agency of the Ministry of Planning and Investment, in the first two months of 2024, foreign investors have invested in 38 provinces and cities across the country.
Among these, Singapore leads with a total investment of over 2.08 billion USD, accounting for 48.5% of the total investment, more than 2.1 times the amount from the same period in 2023. Hong Kong (China) ranks second with nearly 525.7 million USD, making up 12.2% of the total investment, almost 5.1 times the amount from the same period. Japan and China follow next.
FDI flows have entered 16 out of 21 economic sectors. The manufacturing and processing industry leads with a total investment of nearly 2.54 billion USD, accounting for 59.1% of the total registered investment, an increase of 16.8% compared to the same period. The real estate business sector stands second with a total investment of nearly 1.41 billion USD, accounting for 32.7% of the total registered investment, more than 3.5 times the amount from the same period.
Among the investment projects licensed in the first two months of 2024 in the Southern Key Economic Region, most are small and medium-sized projects, primarily in the manufacturing and processing industries. The largest investment project is by BOE Technology Group Co., Ltd. from Beijing, China, in Ba Ria - Vung Tau, with a total capital of 278 million USD.
Notably, the recent signing event between the Ho Chi Minh City High-Tech Park and Siemens EDA (a subsidiary of Siemens) to train human resources in the semiconductor industry in Vietnam, and the completion of preparations by BE Semiconductor Industries N.V. (BESI) from the Netherlands to bring chip packaging machinery into operation at its factory in the Ho Chi Minh City High-Tech Park, highlight significant advancements.
However, D**g Nai is the most active locality in attracting investment in the first two months of the year in the Southern Key Economic Region. In just the first 1.5 months of 2024, this locality has licensed 27 foreign investment projects (including new and increased capital projects) with a total investment of 439 million USD. Major names continue to place their investment trust in D**g Nai, such as SLP, Nestlé, Hyosung, and Kenda...
Citation: vneconomy.vn
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