Page 12 - Layout 1

COVER STORY

among investors. Moreover, Vietnam stands
to benefit from a potential further rise in
global trade protectionism.
It enjoys several clear advantages that
should also help it attract investment flows,
she added: strong growth, a sizeable domestic
market, low labor costs, an abundant work-
ing-age population (with high purchasing
power), trade deals with other nations, and a
strategic location.
“However, structural issues could hinder
Vietnam’s efforts to take its economy to the
next level,” she went on. “Issues such as
limited transportation infrastructure and a
lack of economic diversification may have
held Vietnam back from becoming a global
player. We think increased competition may
force it to improve its product and supply
chains as it seeks to become a high-tech man-
ufacturer. That would require increased pro-
ductivity, education, and technology transfer,
among other factors. Currency policy, for
example, the extent to which the currency
moves in line with the market, has regularly
come up in discussions about potential invest-
ment in Vietnam.”
According to a recent survey by the Dele-
gation of German Industry and Commerce
in Vietnam (AHK Vietnam) on the sentiment
of German firms in Vietnam, 80 per cent of
respondents are now performing well in Viet-
nam, regardless of the ongoing pandemic,
while 40 per cent said they feel satisfied in
the country, which puts Vietnam third in the
Asia-Pacific region after China and New
Zealand. About 55 per cent expect Vietnam’s
PHOTOS: VIET TUAN
economy to strongly recover in 2021. Around
- of global trade and FDI, according to Ms. requires long-term strategies from the gov- 72 per cent said that they will continue imple-
Carolyn Turk, the World Bank’s Country ernment perspective and will attract investors menting their investment plans in Vietnam
Director in Vietnam. with advanced expertise and sound financial in the time to come, while 27 per cent said
Deputy Minister of Planning and Invest- capacity. The capital for such projects tends they will recruit more staff.
ment Tran Quoc Phuong remarked that to require substantial and long-term invest- This reflects a major achievement in Viet-
despite causing serious issues in Vietnam, ment. Last but not least, the pillars that support nam’s efforts to improve the domestic invest-
the health crisis has not curbed FDI inflows these growth opportunities are a transparent ment climate, and the positive impact of the
into the country in the long term, and man- legal system and efficient government. Vietnam FTAs it has signed, especially the EU-Vietnam
ufacturing and processing continues to grow. is taking major steps in this direction, but can FTA, according to the Delegation of German
These will be major drivers of Vietnam’s eco- always take bolder steps as this is the right Economy in Vietnam. The agreement is
nomic growth this year and beyond. “Many direction to move in.” expected to be a major tool that can help Viet-
major foreign groups and companies are eye- The country’s relatively strong economic nam’s economy recover, achieve high growth,
ing Vietnam’s market, which has now basically growth and successful handling of the pan- and attract more investment from Germany
succeeded in controlling Covid-19,” he said. demic should further enhance its attractive- and the EU in the middle and long terms.
“This has strengthened their confidence in ness among foreign investors. However, Ms. In order to achieve these goals, Ms. Phuong
the market. The pandemic is only slowing Wee from Standard Chartered Vietnam sug- recommended, Vietnam should have learned
down FDI inflows into the country. Many gested the country may need to provide a that a pandemic can come out of nowhere
projects have been temporarily suspended clearer vaccination rollout plan to sustain and that returning to the fundamentals can
but will be fully implemented when the pan- its economic recovery. Beyond this year, it provide the country with the necessary
demic eases.” will have to show the global investment strength to fight back the negativities. “The
Vietnam has coped with the pandemic community that it is on track to achieve its fundamentals include a well-structured crisis
much better thanother countries in the region, objectives of becoming a regional supply- management mechanism, an efficient and
which should give it momentum in further chain hub, a modern industrial economy, transparent government, and transformation
attracting FDI. “The other driver in attracting and a high-income country. Vietnam’s to a digital economy,” she emphasized. “Viet-
FDI is the ESG (Environment, Sustainability, increasing role in manufacturing supply nam has planted some of these seeds for
and Governance) trend Vietnam is catching chains in Asia - which is outperforming recovery, which is the catalyst for bringing
up on,” Ms. Phuong believes. “This trend Western economies - increases its appeal back FDI to the country.” %

10 | VIETNAM ECONOMIC TIMES | APRIL 2021