Business Opportunities in Vietnam: FDI Solutions
For nearly four decades (1986 – 2022), business opportunities in Vietnam have been considered a successful model in attracting foreign direct investment (FDI) thanks to its attractive investment environment, stable political foundation, and potential for growth. economic growth is quite high. In 2022, foreign investors will continue to pour capital strongly into Vietnam, still viewing Vietnam as an attractive destination with geographical advantages, institutions, and an increasingly improved investment environment.
Business Opportunities in Vietnam: Solutions to Attract FDI in the coming time
The trend of foreign investment in countries is showing signs of slowing down. This requires Vietnam to implement many effective solutions to attract quality FDI inflows in the coming time. Although Vietnam’s opportunity to attract foreign direct investment is huge, for that opportunity to come true and attract projects from quality and reputable investors, With high efficiency, Vietnam has been focusing on the following solutions:
Continue to promote investment
Continue to promote and attract multinational corporations and well-known companies to invest in Vietnam, especially from regions with strengths in technology, capital, and management skills such as the US, European Union (EU), and Japan. Continue the campaign to promote strategic investment at the national level to directly approach the global supply chains, actively participate in the creation and mobilization of appropriate production and business stages, and have higher added value into Vietnam without passively waiting for investors to come.
With GDP growth in the first quarter of 2020 of 3.82% – although the lowest in the period 2009 – 2020, the highest among countries with data at the same time, it will be a positive signal for investor confidence. Effective anti-epidemic results make transnational corporations shift their investments. Many investors intend to move out of China due to the disadvantages of the US-China trade war1. Vietnam has become a favorite destination for foreign investors.
Vietnam is currently the destination of more than 32,000 projects with a total registered capital of 378 billion USD from 136 countries and territories; in which, Japan, Korea, China, and Singapore are the major foreign investors of Vietnam. This shows foreign investors’ confidence in the investment environment in Vietnam. About 63.9% of Japanese enterprises doing business in Vietnam will continue to expand their business, the highest rate in ASEAN, ranking third in Asia and Oceania (after Bangladesh and India)…
Actively connect with major corporations in the world to exchange investment opportunities in Vietnam, so that foreign investors can better understand Vietnam to support new decisions. To prepare well the institutional, policy, and legal conditions to be ready to receive large projects, projects in line with the orientation of perfecting institutions, improving the quality and efficiency of foreign investment cooperation.
Business Opportunities in Vietnam: attract investment selectively
Attracting FDI must focus on quality, not tolerating projects of any partner in order to direct the economy to develop quickly and sustainably. Vietnam continues to perfect institutions and policies to improve the quality and efficiency of foreign investment cooperation with the goal of focusing on attracting foreign investment selectively, taking quality, efficiency, technology, and Environmental protection as the evaluation criterion. Attracting projects with high added value, pervasiveness, connecting domestic and foreign businesses, and contributing to socio-economic development. To attract FDI, it is necessary to select and prioritize foreign investors, large corporations, with advanced technology leading in technology application, being environmentally friendly and really capable, eliminating the attraction of FDI. FDI is rampant. Linking the FDI sector with the domestic economic sector in order to create and develop domestic supporting industries.
The strategy to attract FDI must be associated with taking advantage of opportunities from free trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the EU-Vietnam Free Trade Agreement. (EVFTA), Regional Comprehensive Economic Partnership (RCEP). EVFTA creates favorable conditions for Vietnam to receive investment capital from the EU. Actively promote and invite multinational corporations, large companies, and brands to invest in Vietnam, regions with strengths in technology, capital, and management skills such as the US, EU, and Japan… To increase the attraction of foreign investment in the high-tech sector, which has spearhead characteristics and breakthrough capabilities, creating added values such as new technologies, pharmaceuticals, financial-banking services, tourism, etc. agriculture, clean agriculture, and food processing.
Focusing on perfecting investment institutions in the direction of facilitating foreign investors, researching and promulgating policies suitable to each industry and field to attract quality FDI inflows. Attracting FDI in the coming time is determined to shift in the direction from attracting quantity to quality, attracting high technology, being environmentally friendly, and especially gradually shifting to attracting foreign investment with price advantages. cheap labor to compete with high-quality resources. It is not easy for Vietnam to open the door for poor quality capital flows to limit environmental damage, transfer pricing, and tax evasion, causing state budget loss. Select high-quality capital flows, and reputable and capable investors to not only limit environmental pollution but also eliminate tax fraud. The EU region’s investment in Vietnam is about more than 25 billion USD, although it is not much, the potential for economic relations between the two sides is huge. European enterprises have financial potential with advanced technology, modern management, and large market availability.
Business Opportunities in Vietnam:: improve the business investment environment
In order to effectively attract FDI after the Covid-19 epidemic, it is necessary to continue to improve the investment environment and amend policies to attract foreign investment. Vietnam has many advantages in terms of the investment environment. Vietnam’s prestige and position are highly appreciated by the international community thanks to its success in the fight against the Covid-19 epidemic. The good control of the epidemic in Vietnam has created a great advantage in the recovery of the economy and established a new position in the international arena. This is a “golden” opportunity for the world to know about Vietnam with the advantage of being a safe investment destination. Besides competitive advantages such as political stability, large consumption market, innovative government, and abundant labor force with competitive cost compared to other countries in the region, investors still There are concerned related to the instability of policies, the number of legal provisions is limited, and inadequate, causing difficulties for investors in the implementation process. It is necessary to continue promoting the simplification of procedures in the field of import and export. Simplify business establishment, digitization, and administrative procedures in the field of customs, tax, and social insurance administrative procedures, thereby further enhancing national competitiveness and profit. the comparative advantage with other countries in the region. The total social cost savings from the reduction and simplification is estimated at more than 18 million man-days/year, equivalent to more than 6,300 billion VND/year.
A series of laws related to investment and business such as the revised Investment Law, the Amended Enterprise Law, and the Law on Investment in the form of public-private partnership has been passed with many new points, in the direction of simplification. investment procedures, transparency, and diversification of investment forms supplementing investment incentive mechanisms for large-scale projects that meet the criteria of great contribution to the socio-economic development of Vietnam have increased the attractiveness of Vietnam to foreign investors.
Along with continuing to promote administrative procedure reform and improve the investment environment, Vietnam needs to pay attention to meeting the requirements of transnational corporations in terms of time to negotiate, sign agreements and deploy implementation declarations; prioritize strategic investors; establish a global production chain and build a mechanism to prioritize high-tech enterprises and transfer technology to domestic enterprises.
Business Opportunities in Vietnam: investment support incentives
In addition to building a favorable business environment for investors, Vietnam needs to continue to issue attractive support packages. Currently, the revised Investment Law and other related laws have added competitive incentives to make it more favorable for investors. Develop a mechanism to support domestic enterprises to connect with FDI enterprises such as support mechanisms on interest rates, finance, and access to investment resources to upgrade capable domestic supporting industry enterprises. join the global supply chain. The biggest goal of foreign investors is profit, so low corporate income tax is an important factor to attract FDI. Using a low corporate income tax tool, combined with other factors such as improving institutions, opening the economy, and enhancing the training of high-quality human resources will help overcome weaknesses in terms of economies of scale. , thereby creating opportunities for success in attracting FDI. Reducing value-added tax has a practical impact, stimulating consumer demand in the domestic market, reducing export tax on goods, and increasing the competitiveness of enterprises and Vietnamese products in the world market. gender. Allowing businesses facing difficulties to extend the time to fulfill their tax obligations including personal income tax, corporate income tax, value-added tax, and import tax. Creating a trust for investors with fair and reasonable mechanisms and policies on the basis of respecting core principles in the tax field such as reasonable deduction of expenses, revenue recognition, and valuation. outsourcing for transactions involving other tax rates.
Completely eliminate informal costs, because this is a bottleneck hindering the investment capital flow not only of FDI enterprises but also of domestic private enterprises. Actively implement investment promotion campaigns, affirming that Vietnam is a safe and reliable investment destination; Connect with major corporations in the world to share investment opportunities in Vietnam. Focus on policy dialogue, and take timely measures to remove difficulties for FDI enterprises, especially in administrative procedures and land. In order to attract foreign investment in the coming time, Vietnam needs to focus on investing and supporting factors in infrastructure, human resource quality, logistics costs, quality, and research, and development costs. R&D), construction of housing for workers.
You can read the previous article here: Business Opportunities in Vietnam: FDI 2022
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Q: What is the currency in Vietnam?
The currency in Vietnam is the Vietnamese dong (VND). The exchange rate as of February 2023 is around 23,000 VND to 1 USD.
Q: What are the main industries driving Vietnam’s economy?
Vietnam’s economy is driven by several key industries, including manufacturing, agriculture, and services.
Q: What is the current state of the economy in Vietnam?
Vietnam’s economy has been experiencing rapid growth in recent years, with a 7.11% growth rate in 2019 before being impacted by the COVID-19 pandemic in 2020.