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Improving FDI quality, quantity crucial for Vietnam: Insiders

Amid the slowing down of the global investment flows, experts held that improving both quality and number of foreign investment projects is a heavy task for Vietnam, requiring great efforts from the Vietnamese Government to fulfil the “dual targets”.
Improving FDI quality, quantity crucial for Vietnam: Insiders ảnh 1Printer production at Canon Vietnam (Photo: hanoimoi.com.vn)
Hanoi (VNA) – Amid the slowing down of the globalinvestment flows, experts held that improving both quality and number of foreigninvestment projects is a heavy task for Vietnam, requiring great efforts fromthe Vietnamese Government to fulfil the “dual targets”.

According to the Foreign Investment Agency under the Ministryof Planning and Investment (MPI), as of May 20, Vietnam had drawn 10.86 billion USDof foreign direct investment (FDI), down 7.3% year on year, including 5.26billion USD of newly-registered capital, up 27.8%.

Do Nhat Hoang, Director of the agency said that the increasein the amount of newly-registered capital in five months was higher than the 11%recorded in the first four months of this year.

Meanwhile, the number of new projects in the five-month period also surged 66.4% year on year to 962 projects, showing foreigninvestors’ strong confidence in the investment environment of Vietnam, he said.

Data from the agency showed that 7.56 billion USD of FDI wasdisbursed in the first five months of this year, revealing an improvementcompared to that in the beginning of previous years.

Hoang affirmed that the slow-down in FDI attraction is notdue to Vietnam’s weaker competitiveness but the common trend of the globalinvestment flow.

The application of the global minimum tax from 2024is also making investors hesitate to make strong investment in Vietnam amid theimpacts of the policy, according to the agency.

However, despite the improvement in FDI attraction, a VinaCapital official held that if Vietnam does not promptly enhance itscompetitiveness, it may be lag behind in the race.

VinaCapital Chief Economist Michael Kokalari underlined two latentrisks for Vietnam in drawing FDI inflows – the competition from India, Malaysiaand Indonesia, and the influence of the global minimum tax policy.

Improving FDI quality, quantity crucial for Vietnam: Insiders ảnh 2Production chain of chargers for Apple (Photo: baodautu.vn)
In late April, Prime Minister Pham Minh Chinh held adialogue with foreign investors, and right after that issued a directive on anumber of tasks and solutions to enhance the efficiency of foreign investment in the new period.  TheGovernment assigned specific tasks to particular ministries, sectors andagencies, focusing on speeding up the design of planning and preparingconditions to attract investors, and strengthening investment promotionactivities.

In its report, the Foreign Investment Agency pointed outthat FDI has still concentrated in localities with great advantages in infrastructure,human resources, administrative procedures and dynamic investment promotionlike Hanoi, Bac Giang, HCM City, Binh Duong, Dong Nai, Bac Ninh and Hai Phong.

MPI Minister Nguyen Chi Dung said that it is necessary toprepare new investment incentives and support packages before the global minimumtax is applied in 2024 to increase the competitiveness of the national investmentenvironment and harmonise interest of investors.

Experts held that in order to improve the quality of FDIinflows, Vietnam should focus on drawing large investors.

Kim Sung-hun, General Director of Amkor Technology Vietnam,which is implementing a semi-conductor factory in Bac Ninh, proposed Vietnam give clear and detailed regulations in fire prevention and fighting, while promptly delivering decisions and measures to respond to the possibleworsening investment environment when the global minimum tax is applied.

Kokalari held that the global minimum tax policy may becomea barrier for the FDI inflows to Vietnam, as tax incentives are not the keyfactor for foreign investors to build their factories in Vietnam. The economistsaid he believes the Vietnamese Government will find out alternative measuresto balance tax obligations when the global minimum tax is enforced./.
VNA
#Foreign Investment Agency #Ministry of Planning and Investment (MPI) #foreign direct investment (FDI) #investment environment of Vietnam #FDI #Vietnam #Vietnam news #Vietnam News Agency
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