The attraction of large foreign direct investment (FDI) inflows from the US and Europe, especially into industries with high added value such as manufacturing, technology and pharmaceuticals, is a positive signal about Vietnam’s economic development and international cooperation as well as the country's efforts in improving its position on the global value chain, according to Savills Vietnam experts.
Production of electronic devices in a company in Hung Yen province
Statistics from Savills Vietnam, a property consultancy firm, showed that there were 2,508 FDI projects of EU countries in Vietnam as of June, with total registered capital of 28.91 billion USD. The figure represents a significant increase compared to 18 billion USD in 1,623 projects in 2016.
The Q3 Business Confidence Index (BCI) report of the European Chamber of Commerce in Vietnam (EuroCham) released in mid-October showed that more than two years after its implementation, the European Union -Vietnam Free Trade Agreement (EVFTA) is continuing to have a positive impact on Vietnam's business landscape. More than 60% of businesses think the deal is beneficial, with the top benefit being tax cuts, followed by improved competitiveness, reduced trade barriers, and expanded partnerships with local firms and increased access to the Vietnamese market.
As for the US market, the recent visit of President Joe Biden along with upgrading their comprehensive cooperative relationship, the interest of investors in this market is expected to increase in the coming time.
According to John Campbell, manager of Industrial Services at Savills Vietnam, although this event only took place about a month ago and will take time to see clear impacts, many US investors have shown their interest in projects in Vietnam.
A Savills Vietnam's research pointed out that in 2016-2022 period, a sudden increase in the export of electronics and phone reflects an improvement in Vietnam's position in the global value chain. Specifically, in the period, the export value of electronic, phones and machinery products increased by 193%, 68% and 336% respectively.
Vietnam is focusing on attracting high value-added investments by improving its workforce and infrastructure while creating favourable conditions for small and medium-sized enterprises and support industries, Campbell said, adding that these efforts have been recognised by many large investors and Vietnam have been included in their future development plans.
Vietnam's BCI in the third quarter of 2023 has increased to 45.1% from 43.5% in the second quarter of this year, according to EuroCham.
The country's global investment attractiveness remains strong, with 63% of surveyed businesses ranking the country in the top 10 FDI destinations, it said. In particular, 31% ranked Vietnam in the top three investment locations.
EuroCham Chairman Gabor Fluit, however, said that while promising Q3 GDP and FDI growth is seen, issues persist - especially with exports and real estate.
He went on to say that addressing administrative burdens, unclear regulations, and permitting hurdles is crucial to achieving progress.
Campbell suggested that to attract world-leading large companies, it is necessary for industrial park developers in Vietnam to focus on value-added services and incentives in addition to price and rentals such as market entry services, human resources and legal support, management services, sustainability initiatives and working with professional industrial real estate agencies./.
VNA
