Open Government Dialogue Attracts Foreign Investors

Vietnam is the fastest growing country in Asia in 2022, the economy recovers in most areas, macro stability, inflation control... these achievements strengthen the confidence of foreign investors in the stability of the investment environment in Vietnam.

Many international financial institutions and experts believe that the reason Vietnam has achieved impressive growth rates in the context of the risk of global recession is thanks to effective economic management policies after the COVID-19 pandemic, especially good control of the epidemic so that businesses can restore operations.

Investors have responded positively, as evidenced by the foreign direct investment (FDI) inflows into Vietnam over the past year, which continues to help maintain the economy’s high competitiveness.

In November 2022, in Binh Duong province, the Danish-based LEGO Group broke ground on its 6th factory, the world's first carbon-neutral factory, with a total investment of 1 billion USD. Photo: VGP

Foreign investors from 108 countries and territories have poured nearly 28 billion USD into Vietnam. Of which, Singapore leads with a total investment of nearly 6.46 billion USD; South Korea ranks second with nearly 4.88 billion USD; Japan ranks third with a total investment of more than 4.78 billion USD.

The survey results "The current status of Japanese enterprises' business activities abroad in 2022" conducted by the Japan External Trade Organization (JETRO) show that 60% of Japanese enterprises operating in Vietnam want to expand their business. This is the highest level in the ASEAN region.

JETRO's report also shows that Japan's outward investment flows grew by only 3% in 2021 and decreased by 49% in the first half of 2022 compared to the same period. However, Japanese investment in Vietnam still increased impressively, increasing by over 59% in 2021 and over 45% in 2022.

According to Nagaoka Taketoshi, Chairman of the Japan Business Association in Vietnam, in addition to the advantages of a favorable location and preferential policies, Vietnam still maintains its strengths in high-quality human resources and low rental costs. Therefore, Japanese investors still consider Vietnam the most attractive destination in Southeast Asia. Solutions to control the macro economy, maintain economic stability and high growth in 2022 have created confidence for Japanese businesses.

Long term trust

In 2023, the world economy is forecast to face many difficulties and global investment flows are unlikely to increase compared to previous years. However, Vietnam is still considered an attractive investment destination for foreign direct investment, especially in the context of manufacturers wanting to diversify their supply chains and shift their investments.

The latest results of the Business Climate Index (BCI) released by EuroCham show that 41% of respondents said their companies are shifting operations from China to Vietnam, a more than three-fold increase from 13% in Q3/2022. In addition, about 35% of respondents said that Vietnam is in the top 5 global investment destinations, with 12% saying that Vietnam is their company's top international investment destination.

Commenting on the BCI results, EuroCham Chairman Alain Cany said that although the difficult situation is likely to continue in 2023, Vietnam’s economic opportunities continue to outstrip those of its regional and international competitors. This is evident in the fact that many EuroCham members consider Vietnam to be central to their global investment strategies.

One example is the French Sanofi Group, the only multinational pharmaceutical company with a manufacturing plant in Vietnam. The pharmaceutical company's only research and development center in Southeast Asia is also located in Vietnam.

Provincial leaders reported to the Prime Minister on the investment plan to expand Vinh International Airport; Leaders of Nghe An province, Ju Teng Group and delegates performed the groundbreaking ceremony of the project at Hoang Mai Industrial Park; VSIP Nghe An Industrial Park. Photo: Document

Assessing the potential for the development of Vietnam's pharmaceutical industry, Mr. Emin Turan - General Director of Sanofi Vietnam, said that the innovative pharmaceutical industry (generic drugs) alone is estimated to have contributed 1.16 billion USD to Vietnam's GDP in 2021, with an annual growth rate of up to 10% in the coming time. These figures show that investment in the Vietnamese market, including the pharmaceutical industry, has positive prospects.

Similarly, Datalogic Vietnam Co., Ltd. in Ho Chi Minh City High-Tech Park (SHTP) is the youngest factory of Datalogic SpA - the world's largest barcode reader manufacturer, but has now become the main factory of the Italian investor. This is also the only factory in Asia of Datalogic Group.

Mr. Dang Van Chung - General Director of Datalogic Vietnam Company, said: "Although put into operation late, the factory in Ho Chi Minh City High-Tech Park now accounts for nearly 70% of Datalogic's total products globally, showing that the Group considers Vietnam as a main production location as well as highly appreciates the investment environment".

According to Mr. Chung, Datalogic has transferred many high-tech production lines from Italy and the US to Datalogic Vietnam, and invested in electronic circuit board assembly lines that directly supply the production of new generation barcode readers.

Open Government Dialogue

EuroCham Chairman Alain Cany, in an interview with Forbes Vietnam, said that one advantage that makes Vietnam attractive to foreign investors is the spirit of open dialogue between the Government and businesses. This is reflected in Vietnam's participation in many free trade agreements.

"A huge progress is that we have access to many draft laws before the Government submits them to the National Assembly. Especially for drafts related to the economy, EuroCham and the Associations are consulted 3-4 times to complete the documents," said Mr. Alain Cany, who said that this is progress in the process of perfecting Vietnam's legal corridor.

Sharing the same view, Mr. Emin Turan highly appreciated and respected the efforts of the Vietnamese Government in always listening to feedback from businesses and holding bilateral discussions to improve the business environment so that businesses can continue to invest long-term in Vietnam. "We hope that the current efforts of the Government will help Vietnam become an attractive destination for global pharmaceutical companies looking to take advantage of the growth potential of developing markets like Vietnam," Mr. Emin Turan shared.

Mr. Emin Turan expects Vietnam to continue creating an open legal corridor to attract more long-term investors and expand investment in Vietnam.