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COVER STORY

Creating a path forward

VET spoke with a range of stakeholders in the foreign investment space
about where Vietnam currently stands.

Global trade and investment have been while low compared to recent years, far out- helped attract foreign investors. Longer-
hit hard over the last 12 months. Since strips most other countries in the region and term, Vietnam has several important advan-
the outbreak of Covid-19, economies around the wider world. This is reflected in tages that make it an attractive trade and
the world have suffered as lockdowns and EuroCham’s Business Climate Index (BCI) - investment destination. Some of these are
social distancing have brought normal business our regular barometer of business sentiment demographic - a young, well-educated pop-
operations to a standstill. Countries are just among European companies operating in ulation - while others are geographic - having
now starting to see a thaw in this deep eco- Vietnam. Each quarter, it tracks the per- a strategic location in the world’s fastest-
nomic freeze, as the roll-out of vaccinations formance of EuroCham’s member companies growing region. But most importantly, at least
begins to gather pace. However, Vietnam has and their perceptions of the economic out- for international investors, is Vietnam’s network
been one of only a handful of international look. Our latest data from Q4 2020 shows of free trade agreements with major markets
outliers. The government’s swift and effective that European business leaders ended last around the world, such as the Regional Com-
handling of the pandemic has enabled busi- year more optimistic about Vietnam’s trade prehensive Economic Partnership (RCEP) and
nesses to operate much closer to normal than and investment environment than at any the Comprehensive and Progressive Agreement
elsewhere in the world. For this reason, Viet- point since the outbreak of Covid-19. The for Trans-Pacific Partnership (CPTPP). For
nam was one of the few countries to record BCI climbed 6 points in the quarter to 63.6, European investors, the EUVFTA is top of
positive economic growth in 2020. The esti- ending 2020 on a high. In total, the index the agenda. This historic agreement, imple-
mated 2.9 per cent annual increase in GDP, rose 37 points over the course of last year, mented on August 1, 2020, will phase out
after falling to a historic low in Q1 when the almost 99 per cent of tariff lines over the
pandemic first hit. Since then, the BCI has next decade while also opening up new sectors
maintained positive growth as Vietnam’s and industries to European investment and
successful handling of the pandemic and innovation. In short, once import duties have
implementation of the EU-Vietnam Free been eliminated, European goods will become
Trade Agreement (EUVFTA) combined to more competitive in the Vietnamese market,
improve confidence and boost business. which will also be liberalized for investment
Vietnam has both short-term and long-term in areas ranging from higher education to
factors that act as magnets for international telecommunications and financial services.
investment. In the short-term, its effective This should unlock a new wave of EU FDI.
control of the pandemic has enabled busi- And once the EU-Vietnam Investment Pro-
nesses to operate more like normal than tection Agreement (EUVIPA) enters into force
Mr. Nicolas Audier, elsewhere in the world. This has reaffirmed - after being ratified in each EU member state
Chairman, European Chamber of Commerce that Vietnam has a safe, secure, and pre- - it will give EU enterprises even greater
in Vietnam (EuroCham)
dictable business climate and, in turn, has incentive to invest in Vietnam. %

Recently, the business and investment were primarily related to Covid-19. The unpre- suggestions, and comments to the government
environment in Vietnam, like most other dictability of the business landscape and mar- through the Vietnam Business Forum and
countries around the world, has been heavily ket demand associated with reduced incomes its committees. %
affected and disrupted by the effects of the all contributed to an environment that was
Covid-19 pandemic. Despite the difficulties, difficult to manage end even more difficult
most foreign enterprises continue to operate to anticipate. The ability to develop strategic,
and survive due mostly to good long-term plan- business, financial, and marketing plans were
ning strategies and risk management approaches heavily affected by the pandemic. The Viet-
to manufacturing, warehousing, and logistics, namese Government must continue to
with less reliance on long supply chains. Aus- improve laws, regulations, and procedures
tralian enterprises look to Vietnam as a safe, for foreign investment in the country. All
secure, and stable investment destination, investment procedures must be business
especially when compared to other neigh- friendly, efficient, and transparent. Application
boring Southeast Asian countries. Foreign procedures in each city and province for busi-
exchange rates have remained relatively stable, ness licenses, investment licenses, and land
foreign banks and the international banking use rights certificates must be logical, uniform,
system are well supported by the government, and easy to understand. And most importantly,
and there are many investment-friendly poli- the government must continue to address Mr. David Whitehead,
Vice President, Australian Chamber
cies and incentives for investment, particularly issues of transparency, corruption, and bribery. of Commerce in Vietnam (AusCham)
in provinces. Of course, the barriers in 2020 AusCham continues to provide proposals,

APRIL 2021 | VIETNAM ECONOMIC TIMES | 11