Vietnam Has Great Room to Attract FDI: Association Chairman (Part 1)

Tuan Minh

09:51 22/12/2015

BizLIVE - Vietnam has great allure as a destination for foreign investment, Prof. Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises told BizLIVE in an exclusive interview.

Vietnam Has Great Room to Attract FDI: Association Chairman (Part 1)

Prof. Nguyen Mai speaks at a seminar held by BizLIVE on Dec. 12. (Photo: Viet Khoi)

Could you highlight Vietnam’s potential to increase foreign direct investment (FDI)?
Vietnam is now gathering many favorable conditions, domestically and overseas, to attract FDI. First, Vietnam has stable politics and high level of security. Expats find comfortable living conditions here.
Second, Vietnam is a fast-growing market. Its population could reach 100 million soon, of which 15 million to 20 million will be categorized into the middle-income group.
Third, although administrative procedures in the country remain somehow cumbersome, foreign players have recognized the government’s big efforts to improve institutions and the investment climate.
Fourth, Vietnam’s economy has been quite stable, with inflation estimated at 1% this year. The government’s macroeconomic management has improved much.
Last but not least, looking at neighboring countries, China’s economy is struggling. Thailand usually gets stuck in political turmoil. Political situations in Malaysia, the Philippines and Indonesia are not stable while Singapore is small.
Besides traditional relations with Japan and South Korea, Vietnam’s ties with the U.S., the EU have been on the positive side.
Therefore, global players see Vietnam as the steadiest destination for investment.
Opportunities are huge, but being able to seize them or not totally depends on the country’s capacity. I much hope that administrative and institutional reforms will accelerate, so that comprehensive changes will come.
Do you agree that 2015 has been a successful year for Vietnam in attracting FDI?
First, FDI disbursements could hit $14 billion this year, the all-time high figure. In comparison with the first wave of FDI in the 1991-1997 period, this amount is 50% larger.
Sizable FDI projects have stretched throughout the country. They include the $1.5-billion LG plant in Hai Phong, Samsung complexes in Thai Nguyen and Bac Ninh, Microsoft factory in Bac Ninh, the Nghi Son Refinery and Petrochemical Complex worth $9.5 billion in Thanh Hoa, the Ha Tinh Formosa Plastics Steel Complex in Ha Tinh, and the $1.4-billion Samsung plant in Ho Chi Minh City.
These projects, once in place, will help Vietnam reduce considerably its trade deficit. For example, the Formosa Steel complex will churn out high-quality steel, which is being imported in large volume from China.
Second, regarding FDI quality, many companies from Japan, South Korea, Germany and the U.S. have come to Vietnam.
Third, Vietnam’s investment climate has become more attractive. According to a Jetro survey, up to 80% of Japanese are keen on investing in Vietnam and 70% of businesses already operating in the Southeast Asian country eye expansion. Similarly, other business associations such as AmCham and EuroCham have released positive assessments.
Vietnam’s World Bank business ranking is poised to advance when the World Bank fully takes into account the country’s steps to streamline tax-related paperwork.
The localities in which foreign-invested enterprises have marked their footprint have become the pioneers in renovating their economies and recorded faster economic growth. They include Thai Nguyen, Bac Ninh and Vinh Phuc in the northern region, and Ba Ria-Vung Tau, Dong Nai, Binh Duong and Ho Chi Minh City in the South.
(to be continued)