New overseas policies ignite fresh FDI wave

Marko Walde, Chief representative, German ­Industry and Commerce Vietnam

The German Industry and Commerce Vietnam expresses our support for the signing and ratification of a free trade agreement (FTA) between the EU and Vietnam. In October 2018, our federal government also announced an agreement in implementing the ambitious plan of the EU: the ratification of the EU-Vietnam FTA (EVFTA) by the end of 2018. The federal government stated that the EVFTA should be given high priority. This agreement underscores the fast growth of the ASEAN region as well as Vietnam.

The EVFTA will bring customs facilitation, information exchange on custom requirements, investment in the modernisation and simplification of customs procedures, and ensuring the transparency of all custom requirements.

This agreement will also create new market access opportunities across a range of sectors, covering goods, services, and investment. Therefore, European and German trade will benefit in multiple ways.

Moreover, EU and German companies can enjoy investment protection with trade facilitation and increase investments in Vietnam. Therefore, local production will be improved with more variety of designs as well as better quality.

EU and German investors would bring their well-known technology in management and training, allow more value-added production, and reduce waste of material and resources. In addition, EU and German investors would create domestic jobs that in turn drive consumer spending in Vietnam.

Germany is the most important trade partner in the EU, and once in force, the agreement will provide opportunities to increase trade and support jobs and growth on both sides.

We see challenges for Vietnamese products in terms of IPR protection, global competitiveness, and the origin of the products’ materials.

The German Industry and Commerce Vietnam is pleased to accompany Vietnamese and German businesses on the path of implementation of FTAs, in which we support Vietnamese businesses in better understanding these agreements, in improving their products and services, as well as in educating their workforce and in networking with potential German partners for know-how and technology exchange.

Tetsu Funayama, Representative, Japan Chamber of Commerce and Industry

Infrastructure is important to attract foreign investors. As we know, Vietnam’s public debt ceiling is nearly 50 per cent of GDP. The Vietnamese government is tightening control over loans. In this context, developing infrastructure under the public-private partnership (PPP) format is an effective tool for Vietnam.

However, there are some problems in the existing legal documents related to PPP that need to be further improved. We propose the government to allow investors and project developers to mortgage land-related assets to facilitate them in raising funding for their projects.

The Vietnamese government should bear certain part of the risks in foreign exchange and provide government guarantees for certain projects.

According to a recent survey by the Japan Bank for International Co-operation, Vietnam is a promising investment destination to Japanese investors in Southeast Asia. However, one of their concerns when they invest in a new market is the development of supporting industries.

The Vietnamese government should consider policies to develop supporting industries in some key sectors, creating favourable conditions for Japanese investors who have strong expertise in the field. Vietnam needs to have tax incentives and financial support for foreign investors in the sector.

Kim Han Yong, Chairman, Korea Chamber of ­Business in Vietnam

In the past, FDI in Vietnam focused mainly on real estate, infrastructure, and manufacturing for exports.

Looking towards the next 30 years, Vietnam should pay attention to improving its business climate, while upskilling labour force to meet the growing demand for sci-tech manpower. In fact, technology transfer between foreign investors and Vietnamese partners is yet to meet expectations due to the lack of skilled workforce.

The business environment and tax incentives are not enough. Vietnam needs to have more friendly policies for foreign investors. Administrative procedures for investment in IT infrastructure should be further simplified.

Another concern is the changing legal framework. The country should improve the implementation of laws so as to ease difficulties for businesses when a new law comes into effect. Many foreign investors left China because of this very reason. It is expected that the investment shift from China will continue in the future and how attractive Vietnam is depends on the country’s future policies.

KHOON GOH, Head of Asia Research, ANZ

In ratifying the CPTPP, Vietnam has committed to initiating extensive reforms covering everything from competition and trade to intellectual property, and market access for goods. While timely, such reforms are crucial for facilitating gains in its absorptive capacity.

The country is expected to be the biggest recipient of FDI flows in the region as it is poised to benefit from relocation in production as the result of the US-China trade tensions. Manufacturing, as said, will account for the lion’s share of the incoming FDI. FDI flows in construction and real estate services have increased in 2018 amid buoyancy in the sector. In addition to traditional greenfield FDI, the divestment of state-owned enterprises has increased and is forecast to increase foreign investor interest in the Vietnamese equity market. The outlook for FDI remains positive. Surveys suggest that around a third of foreign companies in China have shifted or are considering shifting some production in light of US-China trade tensions.

We recently argued that the US-China trade war will further catalyse the incremental diversification of manufacturing out of China.

Even if associated tensions de-escalate, further reorganisation of regional supply chains are imminent as businesses ringfence their production and exports against any future tariff measures. We have identified Vietnam as being best placed in Southeast Asia to reap the benefit of this development. The CPTPP will also boost Vietnam’s investment attractiveness.

Stefano Clini, Managing director, Carlsberg Vietnam

Carlsberg Vietnam strongly supports the EVFTA, which will open a new era full of partnership opportunities and set the highest standards of labour, safety, as well as environmental and consumer protection in Vietnam. Sustainable growth has always been at the core of our business, both globally and in Vietnam, and with the EVFTA in force, we can look forward to more favourable conditions to accelerate our progress in achieving Carlsberg’s sustainability ambitions and targets.

More than two decades ago, we were the first large Danish multinational to enter Vietnam. Now, Vietnam has grown to be one of the key markets for Carlsberg Group. We have high hopes that this agreement will help position Carlsberg Vietnam for further robust growth and more opportunities to deliver the highest quality beverage with Carlsberg’s 170-year history of perfecting the art of brewing.

Satoru Wachi , Deputy general director, Thang Long Vinh Phuc Industrial Park Co., Ltd.

Since 2012, when we were seeking for a location for our third industrial park (IP) project in ­Vietnam, we have received great support from Vinh Phuc authorities.

However, the capacity of the local Industrial Park Management Board remains limited when it comes to licensing or the management of construction works and environment for businesses in local IPs, while licensing and management competences of different agencies overlap.

We expect administrative procedures to be further simplified to facilitate business activities.

Looking forward, the EVFTA and the CPTPP will bring in huge opportunities for Vietnam. We are planning to expand in Vietnam with a fourth and a fifth IP in the country. We are still studying the potential locations.