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At the seminar “Investment and International Trade in a Volatile World: What Should Businesses Do?” Mr. Nguyen Hai Minh – Vice President of the European Business Association (EuroCham) in Vietnam, recently organized by the Vietnam International Arbitration Center (VIAC), said that EuroCham’s survey has shown this from the first quarter of this year. From 2022 to the fourth In the third quarter of 2022, Vietnam’s business environment index fell sharply from 73 points to 48 points.
This reflects the lack of, even negative, optimism in the business results of European companies around the world in general and in Vietnam in particular. Until the first quarter of 2023, this index remained at 48 points, which corresponds to the fourth quarter of 2022.
VIETNAM IS THE NAME ON THE FOREIGN INVESTMENT CARD
In terms of investments, a short survey shows that in the first quarter of 2023, 36% of European business leaders believe that Vietnam is among their top 5 investment destinations worldwide. This is a positive signal. In addition, Vietnam is a country with an active name on the EU business investment map.
“Coupled with this reading and a number of other factors such as the recovery of the global economy, the EU economic growth index has been revised upwards more than forecast in December last year, leading us to believe that the global economy could bottom out in 2023.” a joint survey with EU companies in Vietnam on the number of orders, business performance of companies, etc. is expected to be better in the next quarter,” hopes Mr. Minh.
Mr. Vu Tu Thanh, deputy CEO of the US-ASEAN Business Council, also said that US companies are still very positive about Vietnam in the medium term.
Proof that at the end of March the largest US business delegation (including 52 companies) ever traveled to Vietnam for study and surveys. This proves that US investors are still very interested in the Vietnamese market.
In addition, many other companies have plans to come to Vietnam from now until the end of the year as the trend of relocation and reorganization of the global supply chain continues.
According to Mr. Thanh, investors in accommodation services for US guests aim to make Vietnam the largest market in ASEAN in the next few years. The leading US bank is also considering moving its Asean Hong Kong headquarters to Vietnam.
American companies value the Vietnamese healthcare sector very much. The current US administration’s number one priority in international trade is ensuring the security and resilience of the supply chain. Vietnam can “step into” the healthcare and digital economy supply chain (since American hardware is no longer imported from China). This is a great opportunity for Vietnam in investment cooperation with American companies.
In addition, Mr. Thanh said there is a trend for US indirect investment in Vietnam because of its appreciation of the quality of Vietnam’s assets and capacity. Vietnamese companies should seize this opportunity to boost their production and business in the current difficult situation.
THINKING ABOUT ACCESS TO THE “SINGLE MARKET”
But how to recognize this investment attractiveness, how to seize the current opportunities, especially in the context of new global trends, according to experts in Vietnam, there is still a lot to be done. Much needs to be done and will be done in the near future.
The EuroCham representative said that EU companies see institutional, environmental and administrative reforms as the most important factor in attracting investment to Vietnam.
New trends in today’s world have changed a lot, especially related to green production, green consumption, sustainable development and human rights.
The EU has introduced a new supply chain law that has major implications for companies in the supply chain of European corporations, including Vietnamese exporters.
“Green production and sustainable consumption are no longer just buzzwords, but it’s about time major markets like the EU and the US introduced these laws. “It requires Vietnamese companies to meet these conditions to be able to intervene deep in the supply chain,” Herr stressed
There is much to reform in Vietnam. Specifically, it’s about energy, not just investors involved in energy projects, but Vietnam showed very strong commitment at COP 26 and developed a green growth strategy, which Vietnam has developed and released quite fully.
Renewable energies are an irreversible trend, especially for EU companies this is a sine qua non. On the one hand, this is a potential investment area given that the EU has strengths in wind power, solar power and offshore energy… and helping Vietnam meet its commitments.
On the contrary, this is not an ordinary investment project, forcing Vietnam to recognize renewable energy as an urgent need for manufacturing companies, especially those in the EU supply chain. Without renewable energy, export production projects will be delayed. This forces the government and the Ministry of Industry and Trade to pay more attention to Energy Plan 8, especially the direct electricity purchase and sale mechanism for production projects.
Likewise, added Mr. Vu Tu Thanh, energy is an important sector for US investors. To invest in manufacturing in Vietnam, they need renewable energy, which requires approval of the Power 8 plan because “the ball is in our hands, not foreign investors.”
“We need to think longer-term because the current approach is still in line with domestic market thinking and still requires investors to produce renewable energy and clean energy – that way of thinking is not yet available. Join the trend.” Now it’s a global game. The demand of FDI is in renewable energy and they are willing to pay. “We must win their cooperation to put Vietnam on the world map,” Thanh said.
In addition, according to the EuroCham representative, there is a new trend that Vietnam needs to grasp. Due to the geographic location advantage, Vietnam is in the sights of European investors to become a logistics hub in the ASEAN region. However, the legal basis and the infrastructure have not yet allowed Vietnam to realize this.
“To realize this, Vietnam must have a mechanism for foreign investors to invest in Vietnam and set up a logistics center to make Vietnam a hub for goods in the region. “If the project comes about, it will be a great opportunity for Vietnam,” Mr. Minh stressed.
In addition, the quality of human resources is also an issue that greatly influences the decision to invest in foreign direct investment. In addition to mechanisms to improve the quality of human resources, Vietnam needs a mechanism to attract minds and high-quality human resources from foreign experts. Then there is a technology transfer and training mechanism, only then can Vietnamese human resources catch up and meet the demands of the new situation. Although, according to experts, the current regulations on work permits still have many shortcomings.
Tourism is also a development direction for Vietnam, especially when drafting a mechanism to eliminate visa problems for foreigners in the coming period is also a boost for Vietnam’s economy.
At the seminar, VIAC signed cooperation agreements with 19 industry associations and local associations in Hanoi and northern provinces, including: Vietnam Textile and Apparel Association, Vietnam Association of Seafood Exporters and Producers, National Startup Association, Vietnam Young Entrepreneurs Association, Vietnam Leather, Footwear – Handbag Association, Hanoi Association of Small and Medium Enterprises… to provide legal support, training and sharing of experience in negotiating, signing and managing contract performance; Risk management, contractual disputes…
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