Euro groups keen on smooth policy

Experts insist that a visa-free policy expansion would help grow the tourism industry, among other areas, Photo: Le Toan

In early August, Denmark’s A.P. Moller Maersk Group met with authorities of Vietnam’s southern province of Binh Duong to seek opportunities to invest in a large-scale warehouse and logistics centre.

According to Rene Piil Pedersen, group president of Foreign Affairs and Public Policy in Asia-Pacific, it is operating in five warehouse clusters with a total area of 151,000 square metres in the province. In which, more than half of warehouses are using solar energy, and all use energy-saving lamps and other equipment in warehouse operation.

“We were eager to learn more details about the industrial ecosystem and the upcoming development orientation of the province to prepare for the new investment plan in warehousing, large-scale logistics centre for long-term business activities in Binh Duong,” Pedersen said.

A.P. Moller Maersk Group is one of several European companies venturing further into Vietnam. As shown in the Business Confidence Index (BCI) for the second quarter of 2023 released in July by the European Chamber of Commerce in Vietnam, 48 per cent of respondents expect an increase in their company’s foreign direct investment (FDI) activities.

The report shows a 9 per cent increase in the number of business leaders who assess their business prospects positively for the third quarter of 2023 compared to Q2.

European investors, however, are facing challenges amid global complicated developments and the upcoming global minimum tax regime. The BCI reveals a challenging outlook, with a significant 10 per cent increase in negative responses regarding the current business situation.

This growing sense of caution is further reflected in a 6 per cent rise in negative sentiment for the upcoming quarter. They are waiting for drivers of growth, with regulatory reforms and visa policy to streamline business process deemed among primary factors.

Securing visas and work permits for foreign workers continues to pose persistent challenges, with over 80 per cent of surveyed businesses encountering various difficulties. The prolonged processing time for obtaining visas and work permits emerges as the most pressing issue.

At present, only seven out of 27 EU members are visa exempt. In an effort to increase market access for international visitors, the Vietnamese government on August 15 extended the temporary stay period for EU members and other certain countries to 45 days from the date of entry.

According to experts, although deemed good news, exempting all EU members would be more helpful to encourage EU businesses and investors to go to Vietnam.

“During this trying time, the data suggests that the service sector shows resilience while challenges persist within the manufacturing sector. Overcoming regulatory and infrastructure limitations is vital for smooth operations and increased productivity for businesses to further foster sustainable growth and attract foreign investment,” said Thue Quist Thomasen, CEO of Decision Lab which conducted the BCI.

Le Net, lawyer at LNT & Partners added, “The existing visa policy is yet to encourage investment inflows from all EU member states into Vietnam. Vietnam should consider expanding the list of visa exemptions as it will help the country unlock wide-ranging benefits through tourism, trade, and investment. Regional countries have open visa policies for foreign tourists which helps them have more advantages to attract foreign investment.”

At present, Thailand has expanded its list to more than 10 EU member states, while Malaysia exempts visa for more than 20 EU member states. For Singapore, citizens holding passports of European Union countries are exempted from a visa for 90 days.

Vaibhav Saxena, lawyer at Vilaf said a visa-free policy will grow the tourism industry, and develop the local economy as a whole.

“EU member states have strong financial capacity, digital economy, and green growth which is aligned with Vietnam’s development orientation in the future. It is high time for Vietnam to make the consideration,” he said.

While Vietnam remains firmly positioned among the top five investment destinations for over one-third of EU businesses, underscoring its enduring appeal, EU investment in Vietnam is still lower than expected and great potential of the two sides.

EU investment has not increased by as much as hoped since 2020 when the EU-Vietnam Free Trade Agreement took effect. According to the Ministry of Planning and Investment, the EU remains out of the top six foreign investors in Vietnam so far this year.

In addition, as shown in the BCI, intentions and actual relocation of operations from China to Vietnam are subdued, with the majority (81 per cent) of companies not having relocated any operations. Among them, only a marginal 3 per cent are considering relocation, while 2 per cent have actively planned for the move. In a move to solve related challenges, EuroCham Vietnam in July sent a letter to Prime Minister Pham Minh Chinh, proposing visa exemptions for all 27 EU nations.

Vietnam needs to make improvements in other areas to increase its attraction, the BCI highlighted. Besides regulatory reforms, other factors for growth are skilled labour, measures to promote sustainable development and environment protection, improved access to international markets and export opportunities, programmes to enhance the skills and productivity of the workforce, investment incentives, upgraded digital infrastructure, and tax incentives.

Foreign tourists could soon enjoy visa exemptions again The Ministry of Culture, Sports and Tourism proposed to relaunch visa exemptions for visitors from 24 countries and territories to promote the demand in the tourism sector.

EuroCham calls for broader visa exemptions to boost EU tourism The European Chamber of Commerce in Vietnam (EuroCham) has addressed a letter to Prime Minister Pham Minh Chinh, urging the expansion of the visa exemption list to include all 27 member states of the European Union (EU).

Visa exemptions for whole of EU would being major benefits All European Union members are keen to fully tap into the great potential of the EU-Vietnam economic relationship. Gabor Fluit, chairman of the European Chamber of Commerce in Vietnam (EuroCham), discussed with VIR’s Tung Anh how important the expanded visa exemption is to its tourism industry and economic development.