Vietnam is facing more challenges to attract more foreign direct investment (FDI) as traditional sources of overseas capital are looking for opportunities closer to home.
It was a concern raised by the Vietnam Association of Foreign-Invested Enterprises (VAFIE) at the second annual report on foreign investment in Vietnam for the year 2022, released last week.
Professor Nguyen Mai, chairman of VAFIE and author of the annual report, shared specific examples. He said, "The United States has decreased corporate income tax from 25 to 21 per cent, while also reforming investment licenses procedures. In addition, the government is applying high taxes on imported products to increase the competitiveness of several industrial sectors, such as energy, automobiles, steel, and aluminium."
Mai added that the US is also promoting a “prosperous economic network” that connects allied countries to build supply chains of products such as semiconductors and 5G-remated technology.
“Some countries in the EU, such as Germany and Italy, are trying to limit investment in overseas markets, while France is encouraging its enterprises to expand their operation in high-value sectors, such as automobiles, aviation, and digital technology,” Mai added.
Japan and Korea, the top two foreign investors in Vietnam, are also applying significant policies that are encouraging their companies to seek investment opportunities at home. Notably, Japan has spent $2 billion supporting Japanese manufacturers to return their production from China. Korea is also trying to attract its investors back to the peninsula.
Last year, Indonesia attracted $45.6 billion in FDI, up 44.2 per cent on-year, which was the highest growth globally. China, despite the country being effectively closed due to the pandemic, saw its FDI surge by 6.3 per cent on-year. India was reported to have attracted $83.6 billion in overseas capital for the same period.
To encourage foreign investment, especially from the US and EU, Vietnam needs to adjust regulations to remove barriers for investors. Delphine Rousselet, executive director of EuroCham, said, "There are three barriers that are currently discouraging more EU capital, including unclear regulations, overly complicated administrative procedures, and a restrictive visa system."
|Banking sector suffers difficulties in 2022
The State Bank (SBV) has looked back on the many difficulties for the sector in 2022, which relate to a number of areas, including credit, exchange rate, and liquidity.
|Attracting Indian tourists
The number of Indian tourists to Vietnam saw impressive growth in 2022, and it is expected to accelerate further.
|APAC Realty acquires additional stake in ERA Vietnam
APAC Realty, Singapore leading real estate services provider, has completed the acquisition of 984,697 shares in ERA Vietnam Real Estate JSC and 176,000 shares in Eurocapital JSC, representing 22 per cent of the issued share capital of each company for S$4.9 million ($3.7 million).
|VGS Hidden Castle is attracting investors
The VGS Hidden Castle technology golf chain, launched in mid-February, has rapidly caught the eye of investors and golfers for the scale and professionalism created by its founders.