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COVER STORY

Though the electricity production and dis- are still increasing. This is a sign that
tribution sector attracted a small number When looking at foreign investors still expect to develop
of new projects, these were of large scale, FDI inflows in business activities in Vietnam.”
and with existing projects adding capital September and October, Mr. Nguyen Minh Cuong, Chief Econ-
and rising capital contributions and share omist at the Asian Development Bank
purchases, it ranked second with $5.7 bil- commitments from investors (ADB), said that when deciding to invest,
lion, or 21.6 per cent of the total. In terms are still increasing. This is a businesses always conduct careful research
of new projects, the processing and manu- sign that foreign investors and don’t dwell on short-term develop-
facturing, wholesale and retail trade, and ments. “Many FDI enterprises have said
professional and scientific and technological still expect to develop business that the Vietnamese Government has
sectors attracted the most, accounting for activities in Vietnam.” made a lot of effort to improve the busi-
30.5 per cent, 28.1 per cent, and 16.5 per ness environment, so for the long term,
cent of the total, respectively. MS. DORSATI MANDANI, Vietnam is still an attractive destination,”
Foreign investors invested in 58 cities Senior Economist, World Bank in Vietnam he added. Investors see a strong com-
and provinces around the country in the mitment from the government to over-
first eleven months. The Mekong Delta’s come the pandemic while protecting busi-
Long An province led with $3.76 billion, nesses and the economy.
accounting for 14.2 per cent of the total According to Dr. Nguyen Bich Lam,
thanks to major power projects. In terms their production to other countries. Mr. former Director General of the General
of project numbers, foreign investors Takeo Nakajima, Chief Representative of Statistics Office, with the government’s
continued to focus on large cities with JETRO Hanoi, pointed out that there efforts in institutional reform, improving
convenient infrastructure, such as Ho are some risks in Vietnam’s investment the business and investment environment,
Chi Minh City, Hanoi, and Bac Ninh in environment for Japanese investors, and upgrading infrastructure, the inter-
the north. including soaring labor costs, complex national community has assessed that
While newly-registered and additional administrative procedures, an undeveloped Vietnam has eight groups of advantages
capital both increased in the period, the or unclear legal framework, complicated in attracting FDI. In particular, its political
size of that increase was down compared taxation systems and procedures, and situation is stable, which ensures consis-
to the first nine months of the year, high employee turnover. “Vietnam needs tency in economic development and for-
according to MPI. Disbursed foreign to establish an economic system that does eign investment attraction policies. An
investment reached $17.1 billion, down not curtail the economy and business adequate legal environment is also an
4.2 per cent year-on-year. Notably, the operations, even amid the threat from important factor for investors. The Law
number of new projects and projects with Covid-19,” he added. “The restrictions in on Investment 2020 and the Law on
additional capital were down 31.9 per Vietnam were too harsh and posed an Enterprises 2020, effective from January
cent and 16.5 per cent, respectively. investment risk. Factory disruptions 1, 2021, continue to demonstrate Vietnam’s
According to MPI, global FDI inflows greatly impacted global supply chains.” open foreign investment policy by cutting
in the first half of 2021 recovered better a number of administrative procedures
than expected but investor confidence in MOVING FORWARD relating to investment.
industry and global value chains remained According to many analysts, the dis- Vietnam has also recently signed a
shaky. The competition in attracting for- ruption of FDI inflows in recent times is range of important multilateral and bilat-
eign investment between countries is only temporary and due to the pandemic. eral free trade agreements (FTAs) of
increasing, while global M&A activities In the mid and long terms, foreign great size and stature, such as the Com-
are down. Vietnam’s selective investment investors still have faith in the prospects prehensive and Progressive Agreement
attraction policy, where quality takes for Vietnam’s economy. for Trans-Pacific Partnership (CPTPP),
precedence over quantity, has eliminated According to the Foreign Investment the EU - Vietnam FTA (EUVFTA), and
small-scale projects with little added Agency (FIA) at the MPI, Covid-19 is bilateral trade agreements with the US,
value. Restrictions on entry and the long- gradually being brought under control. South Korea, Japan, and the UK. It has
term isolation policy adopted during the The government and functional agencies ratified the EU - Vietnam Investment
Covid-19 pandemic limited the arrival of have promptly stepped in, introducing Protection Agreement (EUVIPA) and
experts and project development groups a range of solutions and policies to the EU is ready to do likewise, creating
in Vietnam to survey and complete invest- address the difficulties and obstacles a solid legal basis for Vietnam to integrate
ment procedures. In addition, the lock- facing businesses as well as regulations more deeply and broadly into the global
down of factories and restrictions on the and guidelines to adapt to the changing economy and join global value chains.
movement of workers in industrial parks circumstances. In such a context, enter- “This is an important factor in enhancing
stalled production, reduced capacity and prises have begun to restore production the position and attractiveness of Viet-
output, and broke supply chains. All had and business activities, so it is expected nam in the minds of foreign investors,”
a psychological effect on new investors that disbursed investment capital will said Mr. Lam.
eyeing Vietnam. improve. “Vietnam is still among the The survey by JETRO Hanoi indicates
The pandemic has significantly affected countries posting good growth, as most that the advantages Vietnam’s investment
investment in general. Some foreign com- others face severe economic declines, environment hold include market size /
panies in the processing and manufac- and this is a sign of resilience, showing growth potential; stable political and
turing sector have looked to shift invest- that its economic fundamentals are social conditions; low labor costs; good
ment to other countries. According to a solid,” Ms. Dorsati Mandani, Senior living environment for expatriates; and
survey by the Japan External Trade Organ- Economist at the World Bank in Viet- large workforce. “Japanese companies in
ization (JETRO) Hanoi, while no Japanese nam, was quoted as saying. “When look- Vietnam are optimistic about expanding
manufacturers have withdrawn from Viet- ing at FDI inflows in September and their business over the next one or two
nam, a number have transferred part of October, commitments from investors years,” Mr. Nakajima said. %

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