An auto lighting system production line in a Japanese-invested firm in Vietnam (Photo: VNA) Hanoi(VNA) – Bold measures Vietnam has implemented to become a hub for foreigndirect investment (FDI) in the past decade required real political will and commitment,according to an article published in the South China Morning Post on October 19.
The article’s author - Shireen Muhiudeen who is a regionalfund manager with more than 30 years' experience, said the FDI inflow into the SoutheastAsian country grew 10.4 percent between 2013 and 2019 on an annual basis andposted a record high of 16.12 billion USD last year, an 81 percent increaseoverall.
She pointed to a number of bold measures that contributed tosuch growth like instituting transparency in business and governance processes,and obliging state-owned enterprises to operate in non-competitive areas.
The article said a huge increase in FDI into the country beganfrom 2013 onwards, with Samsung considered a major contributor, which isthought to have invested around 17 billion USD in the country since 2008. Proactiveimplementation of business-friendly investment policies and industrial zones,as well as the ample supply of young workers, has helped Vietnam attract FDIfrom other nations, including Japan – one of the new investors in Vietnam’senergy sector.
The writer went on to note that “attracting FDI has notalways been so easy”. She said when Vietnam joined the World Trade Organizationin 2007, it initially followed the same approach adopted by some of itsneighbours and encouraged state-owned enterprises to try and compete withforeign investors.
“But a spate of attacks on foreign-owned factories in 2014spooked investors, leading the government to ban state-owned enterprises fromcompeting with FDI projects, which helped spur the foreign investment rallyseen from 2013-2019.”
According to the article, some may argue that Vietnam’sgeographical proximity to China and its young labour force of 95 million arethe country’s added advantages, but the appeal of a stable politicalenvironment cannot be underestimated.
“Thailand, the Philippines, Malaysia and Indonesia have allexperienced their fair share of political upheavals and uncertainties in recentyears, and would do well to look to Vietnam to understand the importance ofstability,” the article said.
It added that investors also pay close attentionto inflation rates, want a stable foreign exchange rate and dislikebureaucratic red tape – something Hanoi has been committed to reducing by implementinge-tax and e-custom services.
The article noted that over the past decade or so, Vietnamhas moved from focusing on labour-intensive manufacturing towards moreautomated processes, and is now entering its next phase.
According to the article, investors are keenly awaiting therelease of Vietnam’s Ministry of Planning and Investment’s draft FDI strategyfor the next 10 years, which is expected to prioritise hi-tech, high-value andenvironmentally-friendly projects./.
VNA
