Thursday, March 28, 2024 9:38:53 PM - Markets open
VN-INDEX 1,290.18 +7.09/+0.55%
HNX-INDEX 243.92 +1.07/+0.44%
UPCOM-INDEX 91.48 +0.30/+0.33%
What VN needs to do to attract quality FDI after COVID-19
VietNamPlus - 7/15/2020 1:56:03 PM
 (0 ratings. You must sign in to rate.)
 Speeding up infrastructure development and improving ease of doing business and vocational training are among things Vietnam should do to make itself more attractive to foreign investors post-COVID-19, according to investment fund VinaCapital.
 
Don Lam, the fund’s co-founder and CEO, said, “Consultants expect  20 percent of China’s manufacturing sector to move out the country in the coming years.
 
“Not all of that will come to Vietnam, but the country stands to attract a good portion of that for several reasons.”
 
They included factory wages in the country being less than half of those in China though the quality of the workforces is comparable, Vietnam doing an outstanding job in controlling the COVID-19 outbreak and ranking high in various FDI decision making schemes that companies use to evaluate the potential of a country for building factories.
 
Companies looked for some key factors when considering direct investment in a country.
 
They wanted good supply of labour with skills and experience, logistics convenience in places they set up new factories so that they could easily ship in raw materials and ship out finished products, minimal bureaucratic obstacles to setting up and operating factories, and political and economic stability.
 
Vietnam scored well in most of these aspects, and quickly improves in areas it did not.
 
But there were several things it could do to become more attractive to investors.
 
Its logistics costs continued to be high, and it needed to quickly build and improve physical infrastructure to rise in the World Bank Logistics Performance Index from its current 45th position.
 
The Government also needed to improve the country’s position in the World Bank’s ease of doing business rankings by streamlining the bureaucratic processes related to setting up and operating a business.
 
“In the most recent World Bank survey, Vietnam ranks 70th out of 190 countries, ahead of countries like Indonesia, and the Philippines but behind Malaysia and Thailand.”
 
The Government’s recently announced ‘fast track’ initiative to speed up the licensing of FDI projects was a good example of the steps it could take to reduce red tape and bureaucratic hurdles companies faced.
 
The Government should consider promoting quality FDI by setting up an Investment Promotion Agency (IPA) to actively market Vietnam advantages as an FDI destination around the world.
 
The Government tended to approach FDI reactively and only worked with foreign companies that approached it though the Ministry of Planning and Investment and other relevant Government departments had become more aggressive in following potential leads.
 
Next, Vietnam’s vocational training needs to be significantly improved to ensure that the workforce could perform tasks that require higher skill levels, and the country needed to invest in R&D and improve technical universities.
 
Finally, the Government could encourage the formation of industrial clusters around desirable industries such as electronics.
 
This strategy would have the dual advantage of maximising Vietnam’s benefit from FDI investments and giving firms more confidence to locate their higher value-added activities in the country.
 
According to VinaCapital, Free Trade Agreements help attract FDI to a country, especially when they entail measures that improve a country’s ease of doing business. However, it is important to note that Vietnam is already a party to more FTAs than any country in the world, it said.
 
Lam said, “Often countries use a range of tax incentives to attract foreign investment, and of course who does not like tax incentives? But offering overly generous tax breaks is not critical for Vietnam to be successful in attracting FDI.”
 
According to the IMF, tax incentives are “not critical” to attracting FDI and “…cannot substitute for political stability, good macroeconomic fundamentals, the availability of infrastructure, and a sound legal framework.”
 
Lam said his fund expected the next wave of FDI to be driven by companies relocating their factories out of China and have a bigger impact on Vietnam’s economy than previous inflows because multinational companies now had an incentive to help local firms “move up the value chain” to build supply chains in Vietnam capable of supporting those companies./.
VNA
 
Read original article here
 
Newer News
17:07 Petrol prices increase on March 28
23/03 Rubber exports hit $160 million in Feb
23/03 Infrastructure to promote real estate market
20/03 Việt Nam ranks third in crypto gains in 2023
20/03 Việt Nam: A typical ASEAN trading partner of Mercosur
15/03 Petrol prices decrease slightly in latest adjustment
15/03 HCM City urged to create breakthroughs in foreign investment attraction
15/03 Japan seeks to boost seafood processing collaboration with Việt Nam
15/03 Việt Nam's rice exports to Senegal remain low compared to demand
15/03 Northern power corp’s output up 12.02 per cent
Older News
11/07 Conference looks at making full use of CPTPP
06/07 Vietnam needs professional investment environment
05/07 Pork and oil prices key to keeping inflation under control: experts
01/07 Administrative reforms would help unlock EVFTA's potential: EuroCham
01/07 Việt Nam highlights efforts to ensure human rights amidst COVID-19 pandemic
30/06 Vietnam’s trade surplus hits 4 billion USD in H1
29/06 Vietnam’s economy records decade-low H1 growth
27/06 US initiates investigation into Vietnamese tyre
18/06 Deals highlight VN-EU bilateral ties, global integration efforts
10/06 Tra fish industry strives to win over domestic consumers
 
Newsletter Signup
Top Stories
Shares sustain gains on strong investor confidence
Banks given advantages to CASA ratio
Man owes bank nearly VNĐ9 billion in credit card's interest after 11 years
VN-Index corrects, liquidity stays high
Stock Market Upgrade Journey: overcoming hurdles and reaching new heights
Market Update
Last updated at 3:05:00 PM
VN-INDEX 1,290.18 +7.09/+0.55%
Real-time chart
Top 5 Actives
Top 5 Gainers
Top 5 Losers
My Favorite Quotes
Your most recently viewed tickers will automatically show up here if you type a ticker in the Get Quotes box on the top of the page.
Company Research
Type in the symbol above for thorough background information, key statistics and financial information.
Stock Sectors
We continuously improve our services, here are the latest updates...
Portfolio
Allow you to monitor a customised group of securities. You can set up multiple Portfolios to help you better manage your investments.
Trigger Alerts
Get up-to-date alerts delivered directly to your email address.
Stock Screener
Allow you to filter the market and find exactly what sort of company you are looking for.
Live Terminal
Get instant access to FREE REAL-TIME streaming quotes for hundreds of stocks from HOSE, HNX and UPCOM exchanges.