Illustrative image (Photo: VNA)
To achieve double-digit growth in the coming period, Vietnam, assessed to remain an attractive destination for international investors, needs to “upgrade” foreign investment flows, as this is an important resource for economic development, according to insiders.
Positioning itself as investment destination for hi-tech technology
Addressing the current Vietnam Connect Forum, Lim Dyi Chang, Senior Director for Corporate Clients at the United Overseas Bank (UOB) Vietnam said that he is seeing Vietnam's "unique" opportunity to attract high-quality investment flows.
The presence of a series of big names such as Samsung, LG, Foxconn, and Amkor in Vietnam is proof of this statement. It is not only an investment destination, but also an important link in the global supply chain, said Lim.
The number of 42,760 valid FDI projects, with a total registered capital exceeding 510 billion USD, making Vietnam ranked among the top 15 countries attracting the largest foreign investment globally, is a testament to this. However, according to Deputy Minister of Finance Do Thanh Trung, the fact that only about 5% of total foreign investment is poured into the high-tech sector is not commensurate with expectations.
Vietnam cannot continue to compete with cheap labour or low energy costs, Trung stated, stressing the need to move to the selective attraction of investments, prioritise industries with high technology content, using quality human resources and contributing to upgrading the value chain.
Sharing the same opinion, Koen Soenens, General Sales and Marketing Director in DEEP C Industrial Zones, said that Vietnam needs to position itself as a destination for high-tech industries such as artificial intelligence (AI) and semiconductor.
After the Politburo’s Resolution No. 50-NQ/TW was issued in 2019, with the requirement to promote investment cooperation in the fields of high technology and source technology, foreign investment in Vietnam has changed significantly in quality, with more capital poured into high-tech projects. However, the goal of a 50% increase in the rate of enterprises using advanced technology and modern management, and ensuring environmental protection by 2025 cannot be achieved.
More breakthroughs needed
For a double-digit growth in the coming years, attracting foreign investment requires even more breakthroughs, in both capital and the quality of the capital flow are necessary.
Nguyen Anh Tuan, Deputy Director of the Foreign Investment Agency under the Ministry of Finance, highlighted the importance of maintaining the confidence of foreign investors, along with solutions related to institutions, human resources and infrastructure.
To address this issue, according to Tuan, the focus should be on solving the "bottleneck of bottlenecks," which is the institutional framework. At the same time, there is a need for breakthrough policies to support new growth drivers, such as semiconductor and AI.
Nguyen Ba Hung, Chief Economist of the Asian Development Bank (ADB) in Vietnam, categorised foreign-invested businesses into two groups: those targeting exports and those focused on the domestic market. He highlighted that each requires different policies and incentives.
For domestic market-focused businesses, Hung stressed the importance of attractive, reliable policies to attract their investments in infrastructure, such as large-scale LNG power projects.
Regarding export-oriented enterprises, the economist suggested that support programmes are needed, as lead firms in supply chains often have little incentive to replace existing suppliers with local businesses.
Lim Dyi Chang outlined seven key factors that foreign investors seek in Vietnam for the long term, namely ready infrastructure, a stable and transparent legal environment, public-private collaboration in workforce development and innovation, an efficient financial ecosystem and capital markets, a growing middle class driving both consumption and production, clear commitments to sustainable development, and a flexible legal framework for the digital economy.
To truly become a strategic foreign investment hub, Vietnam needs to invest in development foundations, rather than relying solely on competitive incentive policies, added Lim./
