Vietnam has great potential to attract FDI in medical sector

With a large domestic market, Vietnam is attractive to global pharmaceutical and medical corporations

In a recent interview with reporters, Darrell Oh, Chairman of Pharma Group, stated that Vietnam has great potential to attract FDI into the pharmaceutical and medical sectors. This potential is reflected through three factors: Vietnam’s large and growing domestic market, political and socioeconomic stability, and active international integration through participation in 16 FTAs with major economic regions.

Sharing the same positive outlook on Vietnam’s potential to attract FDI in these fields, Luke Treloar, Head of Infrastructure, Government & Healthcare (IGH) at KPMG Vietnam, said that Vietnam is one of the countries with the largest centralized healthcare systems in the region. With abundant resources, a long-established knowledge base, and a young labor force, Vietnam has all the necessary elements to become a hub for medical innovation in Southeast Asia. According to our calculations, over the next 15 years, up to 200,000 new jobs in this field will be created. If appropriate policies are implemented, Vietnam can attract hundreds of millions of dollars through new FDI projects which will contribute an additional US$50 billion to the country’s GDP.

Despite these opportunities, many experts believe that attracting FDI to Vietnam’s pharmaceutical and medical sectors still faces significant barriers. The primary reasons stem from investment policies that are not yet fully open for the pharmaceutical industry. Commenting on this, lawyer Trinh Luong Ngoc, Partner at Vilaf, pointed out common challenges faced by businesses, such as inconsistent legal regulations and complex administrative procedures. Notable examples include issues with contract manufacturing and technology transfer, as well as delays in renewing drug registration licenses. Specifically, pharmaceutical companies often encounter difficulties when their drug registration licenses expire, but the renewal process is delayed due to complex review procedures. Under current regulations, if the license is not renewed, businesses must temporarily suspend the distribution of products, leading to disruptions in the drug supply chain and affecting consumers.

Vietnam needs to develop consistent policies to attract FDI

To address these barriers and enhance the attractiveness of Vietnam’s pharmaceutical sector, Darrell Oh suggested that, given the increasing competition from regional countries with specific incentive policies to attract investors and continuous regulatory improvements, Vietnam must intensify its efforts to attract FDI and foster innovation.

He emphasized three key areas Vietnam should focus on: first, creating a more favorable business and investment environment through clear policies to encourage companies to bring the most advanced therapies to Vietnam and commit to long-term investments. Another important point is a strong commitment to a streamlined, strict management process, ensuring compliance with deadlines for administrative procedures, approvals, and the completion of intellectual property protection regulations.

Second, Vietnam should introduce incentive policies that prioritize innovation and invention, such as establishing research and development centers, encouraging investment in the early stages of product development like clinical trials, and enhancing manufacturing capabilities. Third, Vietnam needs to effectively implement the National Strategy for Pharmaceutical Industry Development.

“We are pleased with the establishment of the National Steering Committee for Pharmaceutical Industry Development,” said Darrell Oh. He proposed further dialogue with businesses to monitor their operations and promptly adapt to market changes, enhance policies and incentive programs to help Vietnam fully realize its potential and boost competitiveness in the region.

Meanwhile, according to Luke Treloar, Vietnam is not the only country striving to promote innovation in healthcare. Many Southeast Asian countries, such as Thailand and Malaysia, are also in the race to attract capital and are investing billions of dollars to develop this sector. Therefore, to enhance competitiveness, Vietnam needs to build consistent policies to attract and encourage investment, bringing the most advanced technologies and creating a favorable environment for both domestic and international businesses to thrive.