Experts have called for policies to support investment in high technology, which they said will help Vietnam grasp the opportunities in luring foreign direct investment (FDI) and at the same time avoid becoming the venue of low-quality and small-scale projects.
Vietnam and the US have lifted up their relations to a comprehensive strategic partnership, which is an ideal condition for Vietnam to take advantage of the US’s friend-shoring strategy, thus achieving high economic growth and comprehensive development towards the goal of becoming a high-income country in 2045, according to economist Dr. Huynh The Du.
In reality, many US firms have taken specific actions to realise the strategy, including Apple, which has chosen India and Vietnam as their new production hubs.
However, according to experts, Vietnam should design investment support policies immediately to optimise the wave of production shift, especially in the high-tech field.
Without suitable adjustments, Vietnam may be exhausted in the FDI race, they held.
Experts from the Republic of Korea, a country with many large FDI projects in Vietnam, emphasised that if the country’s tax policies are ineffective, it will no longer maintain its attractiveness from the investment environment and strength in low-cost workforce.
Economist underlined that amid the increasingly fierce competition in FDI attraction, the most important thing for Vietnam is to maintain a stable legal environment and an attractive and transparent business investment environment. In particular, the country must have new support policies for investors who make great contributions to national development and use large number of workers, and investors in the fields of high technology and green energy.
They explained that the presence of high-tech “eagles” will attract satellite businesses, thereby forming and expanding the technology ecosystem, creating a spillover effect, and minimising opportunities for low-quality and small-scale projects.
Reality shows that although Vietnam is a bright spot in FDI attraction, the quality of FDI tends to reduce and the majority of FDI projects have small and medium scale.
A survey by the Vietnam Chamber of Commerce and Industry (VCCI) covering 1,282 FDI enterprises indicated that nearly 83% of FDI enterprises have capital of less than 100 billion VND. One-quarter of FDI enterprises employ less than 10 employees and 57.4% have less than 50 employees. Regarding revenue, nearly 25% of FDI enterprises earned less than 3 billion VND (122,875 USD) and 77.8% had revenue of less than 100 billion VND in 2022, it said.
Data from the Foreign Investment Agency under the Ministry of Planning and Investment showed that the average capital in each FDI project in Vietnam is about 15-16 million USD. Although the number of FDI projects increased, the total registered capital reduced as there were fewer large-scale projects, which is a worrying issue.
In the context that FDI has and will continue to be one of the important growth drivers for Vietnam, insiders stressed the need for the country to take immediate actions to build its strategy to lure more investment with non-tax such as providing support in training and human resources development, research and development, or assistance in fixed asset investment.