Vietnam is attractive to FDI capital

Vietnam has many friendly characteristics to foreign investors. Important factors promoting FDI prosperity in 2023 include:

First, the geographical location is favorable for investment activities.

Vietnam has a favorable geographical location for trade with the world, both as a regional connection center and as a gateway to penetrate economies in the western region of the Indochina peninsula. With a geographical location close to China, Vietnam can directly access China’s market of more than 1 billion consumers. Besides, Vietnam has the ASEAN community – a market with 650 million people, large The market size is larger than the EU and the GDP is nearly 4,000 billion USD. Vietnam’s policies support many incentives for businesses, especially large FDI projects. Along with that, the advantage of human resources and the domestic market of nearly 100 million people (by 2022) has a rapidly growing middle class, creating a market with quite large purchasing power, attracting the attention of investors. Foreign investment.

The Vietnamese market is especially attractive to investors in most fields: Real estate, consumer goods, automobiles, services, infrastructure…; Furthermore, with the free trade agreements (FTAs) currently signed with ASEAN, Korea, Japan, Australia…, as members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership ( CPTPP), Vietnam has the opportunity to competitively access the regional market. Vietnam also has the advantage of being the center of the fastest growing region in the world – the ASEAN6 region.

Second, the economic – political – social situation is stable.

Socio-politics is stable, administrative procedures are gradually becoming more open; Reduced inspection, testing and unofficial costs are factors that always attract foreign investors. These factors of Vietnam are continuously highly appreciated by FDI enterprises, with a rate of over 90%. Socio-political stability has created strong confidence with domestic and foreign investors, making investors willing to mobilize capital to increase investment and expand production. Infrastructure of industrial parks, export processing zones and economic zones continues to be completed and upgraded.

Third, economic growth results continue to be stable and increasingly prosperous.

Vietnam’s macro economy continues to be stable, inflation is controlled, and major balances of the economy are guaranteed. Currently, Vietnam has become the third largest economy in ASEAN with a GDP of over 400 billion USD. Vietnam is considered by international organizations to be one of the successful countries in attracting FDI. Vietnam’s investment attraction is that domestic electric vehicle manufacturer VinFast has become the world’s third largest automobile manufacturer by market capitalization, after Tesla (USA) and Toyota (Japan). .

Startups in the fields of financial services, robotics and renewable energy in Vietnam have a dynamic working spirit and support each other. It is this powerful combination that has created a favorable local startup ecosystem. The growth of Vietnam – Singapore industrial parks (VSIP), the first of which was established in 1996, has attracted 18.7 billion USD of investment and created jobs for 300 thousand workers. Vietnam is moving up the value chain from footwear and apparel to high-tech, including domestic Fintech companies such as payment service providers Momo, ZaloPay, VNPay as well as foreign startups . As a result, capital spending is expected to grow rapidly, as is domestic infrastructure spending.

Besides, venture capital funds are also increasingly present in Vietnam. Very positive medium and long-term economic growth prospects along with deeper participation in the global value chain with many FTAs ​​in effect, help Vietnam remain an attractive destination for FDI inflows in the future. The process of reshaping investment and global supply chains. Vietnam is truly asserting its position as one of the top destinations where European business leaders want to invest.

Fourth, strive to improve the business investment environment and create trust with investors.

Labor costs in Vietnam (329 USD/month), only 1/3 of that in China (1,119 USD/month), lower than Malaysia (862 USD/month)7. Along with investment incentives, a favorable investment environment continues to be the factor that “attracts” foreign investors to register new investment projects and disburse investment capital. The high competitiveness of domestic supporting enterprises helps Vietnam attract more high-tech FDI projects and source technology from the US. Because compared to the US’s investment abroad (about 200 – 300 billion USD/year), direct FDI investment from the US into Vietnam is not much, on average just over 1 billion USD/year.

Vietnam is one of the favorite destinations for Japanese companies choosing to move production to the ASEAN region, especially after Vietnam – Japan upgraded relations to a comprehensive strategic partnership in November. 2023. The US is also strengthening economic and technical relations with Vietnam after the two countries upgraded their relationship to a comprehensive Strategic Partnership in September 2023.

The policies considered most effective in attracting FDI are VAT exemption and reduction; policies on stabilizing gasoline prices, improving procedures for granting work permits and customs clearance, import-export policies and supporting workers. Stable political and economic foundation, attractive investment incentives, abundant and well-trained workforce compared to other countries in the region, low salary costs for manufacturing workers … makes Vietnam an attractive destination for multinational companies.

Fifth, effectively exploit advantages from FTAs.

Vietnam participates in 17 FTAs, creating an important foundation for foreign investment capital to flow into Vietnam. These include new generation FTAs, such as the Vietnam – EU Free Trade Agreement (EVFTA), CPTPP, and the Regional Comprehensive Economic Partnership (RCEP). New generation FTAs ​​are creating a stronger second wave of integration for Vietnam, helping Vietnam access the free markets of 55 countries, including 15 countries of the G20 group. The wave of investment attraction is expected to strongly boost export activities. The EVFTA Agreement opens up opportunities for Vietnam to attract businesses to invest, not only European businesses but businesses around the world.

In particular, the Vietnam – EU Investment Protection Agreement (EVIPA) provides an opportunity to attract FDI capital flows not only from Europe, but also from other countries that want to benefit from preferential tax policies. Investors target areas that are consistent with Vietnam’s development goals, such as transitioning towards sustainability, which are the most viable long-term investment projects. Canada invests in supporting solar energy development to develop clean technology, investment in Vietnam is still quite low. Vietnam’s growth continues to create opportunities for Canadian businesses in the fields of infrastructure, planning and design where new materials are needed, construction, operations and project management.

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