Localities get ready for fourth FDI boom

In the first quarter of 2024, Vietnam registered 6.17 billion USD of FDI capital poured in 17 out of 21 economic sectors, an increase of 13.4% over the same period.

Automobile components are made at foreign-invested Pim Vina Ltd Co, Ltd in My Trung industrial park, My Loc district, Nam Dinh province. (Photo: VNA)

During a working session with Vietnam's Minister of Planning and Investment Nguyen Chi Dung in China late last month, Chinese Minister of Commerce Wang Wentao said that some Chinese production chains in textiles, household appliances and wooden furniture have moved to Vietnam. Chinese investment in Vietnam is increasing rapidly, particularly in the electronics sector. Many Chinese supporting businesses that supply products to major global electronics companies like Samsung and Apple have also set up factories in Vietnam after surveying other competing countries.

As part of the shifting trend, Taiwanese Quanta Computer Inc Group - one of the largest computer manufacturers in the world, specialising in assembling MacBooks for Apple - decided to build its ninth computer factory in My Thuan industrial park in Vietnam's northern province of Nam Dinh with a registered capital of 120 million USD and a capacity of 4.5 million products per year in Phase 1.

Tran Anh Dung, Vice Chairman of the Nam Dinh provincial People's Council said that to attract investors, the province has made preparations in all aspects from land funds for infrastructure development in industrial parks and economic zones, human resources, energy infrastructure and supporting industries to procedures. As a result, investment registration procedures for the project were completed within just 24 hours after receiving the dossier and only 15 days after the signing of the project development agreement. This shows the importance of a supportive eco-system in attracting investment.

Do Nhat Hoang, Director of the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment said that a new wave of FDI is coming to Vietnam. In the new southern policy of the Republic of Korea (RoK), Vietnam is placed at the top position in attracting investment. Many MoUs between businesses of the two countries have been implemented since the official visit of the RoK President to Vietnam in June 2023.

Hoang affirmed that in this period, Vietnam looks for investment in high technology, and new technology and says “No” to projects with outdated technology, environmental risks or labour-intensive ones.

The fourth FDI wave to Vietnam is expected to bring US investment capital flows as many US business delegations are surveying the semiconductor chip ecosystem in Vietnam. Many European business delegations are also surveying opportunities in Vietnam with special attention to the country’s green growth strategy and its commitment to net-zero emission reduction by 2050.

Vietnam has been concentrating on preparing clean land funds through infrastructure development in industrial parks, training high-quality human resources, developing new electricity sources, and logistic services and improving business climate, Hoang said.

He added that in the past, it was difficult for FDI investors to meet provincial leaders and officials, but now top provincial leaders are willing to meet, discuss and support investors to solve their business problems.

To attract high-tech projects, economists recommended that the Government improve competitiveness by building an appropriate investment incentive policy framework, especially when Vietnam started applying the global minimum tax regime on January 1, 2024.

In particular, Vietnam needs to have policies to support domestic enterprises so that they can participate deeper in the supply and production chains of FDI enterprises, especially in the high technology segment.