Experts: Link with global giants to better compete

Engaging multinationals could be the key to unlocking global supply chains, Photo: Le Toan

Director of the Vietnam Institute of Economics Tran Dinh Thien suggested finding and establishing strategic relations with global business giants would be crucial to boosting the country’s competitiveness.

“In today’s business landscape, production is often based on global value chains. Each chain has the engagement of one or several global groups which are decisive to lure other companies,” said Thien, adding that, to join the global value chain Vietnam would need to woo multinationals to the country and foster their co-operation with local firms.

A case in point is when US tech giant Intel dropped anchor in Vietnam back in 2006 with $1 billion in capital commitment. To attract the project, the Vietnamese government reportedly gave the nod to diverse incentives to Intel, even though at that time there were contrary opinions about the incentive mechanisms being offered.

Later on, many other global technology players followed in Intel’s wake, such as Samsung, Nokia and LG.

For example, Korean tech titan Samsung has pumped over $6.85 billion into Vietnam in large-scale handset manufacturing complexes.

“Treating such big groups the same as small and medium-sized companies is not the right approach,” said Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises.

“These business giants often have long-term investment and business plans. We can appeal to these firms once we have good policies in place that match their development visions,” said Mai.

With a wealth of experience in foreign direct investment (FDI), Mai stressed the need to have a long-term strategy to attract FDI.

“It would be greatly beneficial to the economy if in each business sector of our development priority plan, such as in electronics or petro-chemistry, for example, we could attract one global  giant, helping to build a backbone for the economy and boost local firms’ engagement in the global value chain,” Mai noted.

Mai cited one recent case where Taiwan’s Formosa asked for diverse incentives, albeit within regulations, which were green-lighted by the Vietnamese government.

“We need to go that way to charm global players,” Mai said.

Thien from the Vietnam Institute of Economics, however, thought ‘that was not enough’ and stressed the importance of having attractive and breakthrough mechanisms to attract global giants acting as national strategic partners to the country, not simply offering preferential taxes.