Open dialogue from the government attracts foreign investors.

Vietnam was the fastest-growing country in Asia in 2022, with its economy recovering in most sectors, macroeconomic stability, and inflation under control. These achievements reinforce foreign investors' confidence in the stability of the investment environment in Vietnam.

Many international financial institutions and experts believe that Vietnam's impressive growth rate amidst the risk of a global recession is due to effective economic management policies after the COVID-19 pandemic, especially the successful control of the disease to allow businesses to resume operations.

Investors have responded positively, as evidenced by the amount of foreign direct investment (FDI) into Vietnam last year, and this continues to help maintain the high competitiveness of the economy.

In November 2022, in Binh Duong province, LEGO Group, headquartered in Denmark, held a groundbreaking ceremony for its sixth factory and the world's first carbon-neutral factory, with a total investment of $1 billion. (Photo: VGP)

Foreign investors from 108 countries and territories have poured nearly $28 billion into Vietnam. Singapore leads with a total investment of nearly $6.46 billion; South Korea ranks second with nearly $4.88 billion; and Japan is third with a total investment of over $4.78 billion.

According to the survey "The Status of Japanese Businesses Overseas in 2022" conducted by the Japan External Trade Organization (JETRO), 60% of Japanese businesses operating in Vietnam want to expand their operations. This is the highest rate in the ASEAN region.

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

According to Nagaoka Taketoshi, President of the Japan Business Association in Vietnam, in addition to its advantageous location and preferential policies, Vietnam maintains its strengths in high-quality human resources and low labor costs. Therefore, Japanese investors continue to consider Vietnam the most attractive destination in Southeast Asia. The macroeconomic control measures, economic stability, and high growth achieved in 2022 have instilled confidence in Japanese businesses.

Long-term confidence

In 2023, the global economy is projected to face many challenges, and global investment flows are unlikely to increase compared to previous years. However, Vietnam remains an attractive investment destination for foreign direct investment, especially as manufacturers seek to diversify their supply chains and relocate investments.

The latest Business Confidence Index (BCI) results published by EuroCham show that 41% of respondents said their companies are relocating operations from China to Vietnam. This figure is more than three times higher than the 13% recorded in Q3 2022. Additionally, approximately 35% of respondents consider Vietnam among the top five global investment destinations, with 12% viewing it as their company's top international investment destination.

Commenting on the BCI results, EuroCham President Alain Cany stated that, although challenging conditions may continue into 2023, Vietnam's economic opportunities continue to outperform its regional and international competitors. This is clearly demonstrated by the fact that many EuroCham members consider Vietnam central to their global investment strategies.

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

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

Assessing the potential for development in Vietnam's pharmaceutical industry, Mr. Emin Turan - General Director of Sanofi Vietnam, noted that the innovative pharmaceutical industry (brand-name drugs) alone is estimated to have contributed $1.16 billion to Vietnam's GDP in 2021, with an annual growth rate that could reach 10% in the future. 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 - a major global manufacturer of barcode scanners - but it has now become the flagship factory of the Italian investor. It is also the only factory of the Datalogic Group in Asia.

Mr. Dang Van Chung, General Director of Datalogic Vietnam, said: "Although it started operating late, the factory in Ho Chi Minh City High-Tech Park now accounts for nearly 70% of Datalogic's total global output, showing that the Group considers Vietnam a key production location and highly values ​​the investment environment."

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

Open dialogue within the government.

EuroCham President Alain Cany, in an interview with Forbes Vietnam, stated that one advantage making Vietnam attractive to foreign investors is the government's open dialogue with businesses. This is evident in Vietnam's participation in numerous free trade agreements.

"A huge step forward 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 other associations are consulted 3-4 times to finalize the text," said Alain Cany, adding that this is progress in perfecting Vietnam's legal framework.

Sharing the same view, Mr. Emin Turan highly appreciated and valued 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 with the current efforts of the Government, Vietnam will become an attractive destination for global pharmaceutical companies seeking to capitalize on the growth potential of developing markets like Vietnam," Mr. Emin Turan shared.

Mr. Emin Turan expects Vietnam to continue creating a favorable legal framework to attract more long-term investors and expand investment in Vietnam.