Sentiment strong from top US investors in Vietnam

John Rockhold-Chairman, American Chamber of Commerce in Vietnam

They see financial sector reforms that will lead to US investment into the Vietnamese market versus frontier market status for Vietnam. They also encourage reforms to attain an investment-grade sovereign rating for Vietnam. Both are important steps to attract US capital inflow.

Greater transparency and predictability in Vietnam’s tax system would strengthen Vietnam’s investment climate, particularly avoidance of retroactive rulings and assessments. They encourage Vietnam to seek mutual ratification and implementation of a bilateral tax treaty with the United States and to avoid double taxation of American citizens working here in the interim.

Although positive growth was maintained during the pandemic, many hard-hit industries such as tourism, hospitality, food and beverage services, and transportation have seen businesses either downsize or suspend operations. They urge the government to stabilise tax policies in the coming years to help businesses recover and grow sustainably.

In today’s world, digital transformation significantly reduces costs, provides products and services to a broader range of consumers and businesses, and increases access to newer and bigger markets. Vietnam has already experienced strong growth in e-commerce, fintech, edtech, and the creative economy. To reach its full potential, Vietnam needs to ensure an enabling regulatory environment that is consistent with international practices as goods, services, and data increasingly need to cross borders.

US companies want to see continued dialogue between the US private sector and governmental agencies to ensure new regulations encourage open, transparent, and globally consistent policies on information, data privacy, protection of intellectual property, cybersecurity – and free, fair, reciprocal trade in digital services that conforms with global norms for both foreign and domestic companies.

US corporations are demanding clean sources of energy for their future operations in Vietnam. Progress on Vietnam’s energy transition will create benefits for the broader economy and help meet the commitments made at COP26. The signing of the clean energy policy in the Power Development Plan VIII (PDP8) and the governmental approach views energy growth from many angles. Access to finance, tax policy, reducing use inefficiencies, public education, carbon emissions, bankability, bridge fuels, and the need for transmission, storage, and innovation will do much to bring in new US investments and trade.

The PDP8 is embracing a number of new innovations, such as hydrogen, storage capacities and other types of renewables that are high on US investors’ priorities.

To attract the necessary US investors and to move away from coal, Vietnam will need a policy for implementing the PDP8 of bankable, economically feasible, and lower-emission energy projects.

To maintain grid stability and expansion, Vietnam must secure investments in a baseload sufficient to replace coal. This means the transition from gas and hydrogen towards renewables will require a pathway that includes energy storage. These projects can be designed now and will attract US developers, investors, and operation partners with Vietnamese long-term operators for the introduction of hydrogen as a renewable, clean fuel source in the near future.

US companies are eager to see progress in the private sector discussions with Vietnamese authorities in creating a legal framework for high-quality energy projects to access funding from international financing markets. But also, they want to help Vietnamese power developers to attract the necessary international financing and to pass international financial due diligence.

Subsidised feed-in tariffs have played a key role in attracting renewable energy investors and manufacturers, making Vietnam the leader in renewable energy capacity within Southeast Asia. Renewables must play a role in Vietnam’s energy future.

Over the longer term, international, unsubsidised rates for electricity from renewables, liquefied natural gas, and other power sources are compatible with Vietnam’s roadmap for electricity pricing and will also support compliance with international climate agreements and attract investors.

In addition, a financially strong Electricity of Vietnam and bankable power purchase agreements will make it possible for US private investors to access lower-cost green financing and reduce emissions. The US power and energy sector welcomes the opportunity to provide continued realistic input into the policy dialog regarding the development of the country’s energy sector.

The pandemic has also highlighted the importance of other infrastructure including ports, airports, roads, and bridges, and the assessment of routes from Vietnam to the US. Infrastructure projects contributing to clean air, clean water, and a clean environment can benefit investment, trade, and travel alike, and US investors have the technology, know-how, and financing.

Human infrastructure is also important and US investors are committed to helping develop a globally competitive workforce in Vietnam. They are already supporting the upgrading of vocational training programmes as key to skilled labour needs. But they also see the need for additional education, information and communication in key areas like energy, infrastructure and the environment, so Vietnam is developing towards becoming an informed population for making the right investment decisions.

US investors are optimistic about the future in Vietnam. They believe that substantive progress on the issues raised above will enable a sound and resilient investment environment and support Vietnam’s aspirations to propel itself to the next sphere of economic competitiveness.