Capital influx from Taiwan builds up steam in Vietnam

April 17, 2024 | 19:00
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Many Taiwanese investors have plans to set down deep roots in Vietnam, especially in the high-tech sector.
Capital influx from Taiwan builds up steam in Vietnam
Taiwan offers a vast amount of expertise in technology, electronics, and much more besides, Photo: Le Toan

Over 175 member associations spanning 72 economies worldwide were represented at the first Vietnam-Taiwan Business Forum in Hanoi last week to establish business connections with Vietnamese counterparts.

Nguyen Hong Chung, general director of event co-organiser DVL IPT Investment and Trade Promotion, told VIR, “This is the first time World Taiwanese Chambers of Commerce [the other co-organiser] has held an event in Vietnam in the past 30 years. When we raised the proposal to organise a forum to create a platform for the two parties’ business and investors community, the chamber immediately agreed, illustrating its attention to Vietnam’s investment environment.”

In recent years, large Taiwanese corporations have been increasing investment expansion in Vietnam to disperse product risks.

“Vietnam has solidified its position as the most attractive investment destination for Taiwanese companies in Southeast Asia and globally,” said Richard R. C. Shih, representative of the Taipei Economic and Cultural Office in Vietnam, at the forum.

Shih said that in the latest survey by Taiwanese authorised agencies, Vietnam will remain the top investment destination overseas for Taiwanese businesses in the electronic industry over the next three years. Meanwhile, nearly 18 per cent of traditional businesses will continue to choose Vietnam, followed by Malaysia, India, the Philippines, and the United States.

“The two sides have the potential to cooperate in semiconductor because Vietnam has many policies to encourage investment flows into the high-tech field. Meanwhile, Taiwan is currently playing a key role in Industry 4.0 thanks to the strength of its high-tech and semiconductor industries,” Shih said.

“We expect that both economies will have more practical programmes to promote cooperation in this field. To be able to effectively engage this capital flow, Vietnam needs to ensure energy supply and have strategies for sustainable development of green energy sources,” he added.

According to experts at the forum, within the next 3-5 years, the north of Vietnam could become a centre for Taiwan’s world-leading high-tech electronics, while the south already boasts traditional industrial clusters for textiles, footwear, and wooden furniture.

In recent years, major Taiwanese electronics conglomerates like Foxconn, Wistron, Qisda, Pegatron, Compal, and Quanta have entered Vietnam and made consecutive expansions.

At present, Vietnam holds ambitious to become a semiconductor hub for the globe, as demonstrated by its efforts to upgrade diplomatic relations with countries such as the US and Japan to a comprehensive strategic partnership.

Taiwan, renowned for its successful semiconductor industry, offers valuable expertise that Vietnam can leverage to achieve its developmental objectives.

Statistics published by the Foreign Investment Agency under the Ministry of Planning and Investment showed that cumulatively as of March 20, Taiwan ranked fourth out of 145 countries and territories pouring money into Vietnam, with nearly 3,150 projects registered at $39.52 billion.

Taiwanese investments are dispersed across more than 50 localities throughout Vietnam. Leading the pack is the central province of Ha Tinh, with an impressive registered investment capital exceeding $11 billion. Second place is the southern province of Binh Duong, with capital surpassing $6 billion, followed by the neighbouring province of Dong Nai at $5 billion.

Last year, the Taiwanese Chamber of Commerce in Hanoi celebrated its 30th anniversary. In 2024, the Taiwanese Chamber of Commerce in Ho Chi Minh City and the southern province of Dong Nai will also celebrate its 30-year anniversary. These milestones highlight the long history of Taiwanese investments in Vietnam and the strong business and cooperation ties between the two economies.

In the first 20 years after Vietnam engaged in its doi moi economic reforms, Taiwan was the largest source of foreign investment to Vietnam, creating many jobs and contributing to the country’s socioeconomic development journey.

Today, there are over 3,000 Taiwanese-led projects in Vietnam. Taiwan remains Vietnam’s fourth-largest source of foreign direct investment, after South Korea, Japan, and Singapore, with $39.52 billion in accumulated registered investment capital here.

However, if adding investment from Taiwanese corporations made via a third country, such as through subsidiaries in Hong Kong or Singapore, total Taiwanese investment would be closer to $50 billion, making Taiwanese the third-largest accumulated investor.

In recent years, Taiwanese investment to Vietnam has increasingly focused on the electronic manufacturing sector. Many major Taiwanese companies producing electronic goods such as computer parts and mobile phones are choosing Vietnam to expand their overseas operations. In a recent survey of Taiwanese companies regarding their overseas investment plans, Vietnam was the number one destination that Taiwanese companies are considering for overseas investment.

Against the current background of a global supply chain restructuring, Vietnam has emerged as a top destination for foreign investment. In particular, a cluster of electronics manufacturers is being established in the northern part of Vietnam.

Taiwanese businesses from around the world are likely to continue to consider Vietnam in their global business plans, and to together contribute to the positive development of both Taiwan and Vietnam.

Also, given Taiwan’s experience in the green energy transition and developing sustainable manufacturing, and given Taiwan’s important footprint in Vietnam’s industrial sectors, there are numerous opportunities for Taiwanese businesses and investors to engage in environmentally friendly and high-tech projects in Vietnam. Source: Taipei Economic and Cultural Office in Vietnam

Do Nhat Hoang, director general Foreign Investment Agency

In recent times, Vietnam has maintained positive growth amid a global recession. The inflation rate has remained stable at 3.25 per cent, well below the 4 per cent target.

Moreover, Vietnam’s trade balance deserves attention. Last year, Vietnam achieved a trade surplus ratio of 28 per cent, up from 12.5 per cent the previous year. The country also attracted a total registered foreign direct investment of $36.6 billion in 2023, up over a 32 per cent on-year.

With its continued investment in Vietnam, Taiwan now ranks fourth among markets investing in the country. This result reflects Vietnam’s significant efforts in improving the investment environment. According to international organisations, Vietnam’s investment environment currently leads in Asia and ranks second globally.

To fulfil commitments and ensure investors’ rights, as well as maintain competitiveness in the investment landscape, Vietnam is implementing various measures. Land allocation for projects is crucial among them. Additionally, Vietnam is actively preparing a high-quality workforce and developing infrastructure to support investment ventures.

Reducing complex admin procedures is essential for preparing the necessary conditions for business operations. At the central level, task forces under the guidance of the prime minister have the responsibility to clarify and streamline procedures.

At the local level, responsible agencies such as planning departments, industrial park management boards, or permanent offices must accept and promote the necessary changes.

Another crucial aspect is information dissemination and issue resolution. Ensuring that information reaches the highest provincial leaders enables them to make effective decisions and address issues. This is a departure from the past, when businesses often struggled to communicate with the leadership.

Pham Tan Cong, chairperson Taiwan Affairs Commission

Taiwanese investment over the past 35 years has undergone a qualitative change, shifting from labour-intensive industries such as textiles, leather, and wood in the 1990s to electronics and high technology.

Major Taiwanese electronics corporations such as Foxconn, Wistron, Quisda, and Pegatron have all invested in Vietnam, signalling positive cooperation between the two economies.

In recent years, despite global economic difficulties, economic, trade, and investment relations between Vietnam and Taiwan have continued to grow. While global investment trends are declining, investment from Taiwan and Vietnam saw a significant increase in 2023 compared to 2022. This indicates that Taiwanese investment in Vietnam will continue to trend upwards in the coming years.

Vietnam’s economy has maintained a high growth rate for nearly 40 years and continues to show bright prospects. Vietnam’s GDP scale in 2023 ranked among the top 40 in the world, international trade scale ranked among the top 20, and Vietnam consistently ranks in the top 10 globally in attracting foreign direct investment. Vietnam’s business environment is consistently a focus for improvement to provide the best conditions for investors.

Vietnam is also currently considered a crucial link in the trend of global production and supply chain shifts, especially in high-tech electronics. The government’s direction towards digital transformation and building a green economy is also a positive factor that foreign investors in Vietnam can leverage.

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By Oanh Nguyen

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