According to a report by the United Nations Conference on Trade and Development (UNCTAD), developing countries have entered a fierce competition over FDI attraction, especially given the projected drop in FDI capitals in 2023 and an increase in FDI demands for post-COVID recovery. The context poses a critical challenge for Vietnam, requiring its authorities to come up with innovative and synchronous solutions.

Vietnam remains an appealing FDI destination

At the conference “Stronger Investment Partnership for a thriving Vietnam” held by Vietnam Investment Review newspaper on May 15, Deputy Minister of Planning and Investment Do Thanh Trung pointed out challenges facing the global economy. Given the context, he said, FDI inflows to Vietnam has been slowing down. Big global corporations have been more careful in making investment decisions, he added. However, the situation has been gradually improved, Trung noted. Accordingly, in the first four months of 2023, FDI capital registered in Vietnam reached nearly 8.9 billion USD, down only 18% year-on-year while the first quarter saw a much greater decline of 39% year-on-year. FDI inflows through capital contribution and company shares acquisition channels reached 3.1 billion USD, up 70%. Newly registered projects also recorded a 65% increase year-on-year. A recent survey by Japan External Trade Organization (JETRO) revealed that 60% of its participants look to expand their business in Vietnam in one or two years, marking the highest in ASEAN. An Eurocham’s survey also echoes the upbeat trend with Vietnam being ranked among five most attractive investment destinations globally.

Investment environment needs continually improving

At the event, Choi Joo Ho, General Director of Samsung Vietnam Complex proposed that investment environment in Vietnam needs continually improving in line with external business environment. Vietnam should concretize its policies within this year, specifically on adjusting domestic minimum tax and developing cost-based preferential policies to counter the global minimum tax, he said. The government needs to consolidate trust among foreign investors, Choi added. Responding to investors’ opinions, Deputy Minister Trung said the government has been carried out concrete solutions. First, the country will develop a sci-tech and innovation ecosystem having a flexible management mechanism. Second, it will develop a strong state sector which is capable of global integration. It is in order to better link and facilitate the FDI sector. Third, areas of domestic strength and competitive edges are to be boosted to better support the domestic and FDI firms, tightening their interconnections to sustainably develop the economy./.