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Vietnam losing advantages to attract foreign investment
The big economies, including in Taiwan, Japan and South Korea, are believed to see strong recovery next year, which will prompt the investors from these countries to make outward investments. Vietnam remains the attractive destination in the eyes of investors. However, experts have pointed out that Vietnam is losing its advantages .
At the conference on exchanging experience in promoting investment held in Binh Duong province on December 27, ten officers in charge of investment promotion from Vietnamese representative agencies in foreign countries, shared the information they get about the foreign direct investment (FDI) flow to Vietnam. It was said that Vietnam had shown many shortcomings .
According to Bui Trong Dinh from the Vietnam Cultural and Economic Office in Taipei (Taiwan), Taiwan’s economy is bright this year with the expected GDP growth rate of 10 percent, the highest growth rate in the last 11 years. The good thing is that Taiwanese investment associations all highly appreciate the investment opportunities in Vietnam, considering Vietnam an important destination. In fact, many Taiwanese investors have arrived in Vietnam, including Formosa, Chinphon or CT&D.
“Most investors say they will remain faithful to Vietnam. They have been not only expanding their businesses’ scale in Vietnam, but have also been luring other investors,” Dinh said.
“However, Vietnam needs to show more creativeness as an investment destination and improve its competitiveness if it wants to continue to attract investment,” he added.
He went on to say that in the minds of Taiwanese investors, Vietnam’s economy maintains high growth rates in the last two years, but it is still necessary to reconsider the quality of growth.
“They say Vietnam’s macroeconomic management is not stable, while Vietnam’s inflation rate is high at the two-digit level. All these factors have badly affected the willingness of Taiwanese investors to make investment in Vietnam,” Dinh said.
Taiwanese investors also fear that the lack of skilful workers in Vietnam will influence their projects. The advisor to Chinphon Group also noted that the weak point, which has persisted for the last two years, has forced some Taiwanese groups to make investment in China mainland instead of Vietnam as they initially planned.
To date, Taiwan remains the biggest foreign investor in Vietnam. However, Vietnam has been warned that it will have to compete with other countries to attract Taiwanese investment. In June 2010, China mainland and Taiwan signed an economic agreement, under which China offers tax exemption to 500 product items, and Taiwan offers tax exemption to 180-200 product items. The agreement aims to create favorable conditions for the trade liberalization and pave the way for Taiwanese investment in China.
Nguyen Thi Minh Hien from Vietnamese Embassy in South Korea also said that the shortage of skilful workers is the biggest worry for South Korean investors. Samsung Group, when making investment in Vietnam, has also brought about many South Korean enterprises in supporting industries. However, even when they spend money to train laborers, they still don’t have enough qualified workers.
Also according to Hien, though the total investment expenses in Vietnam are lower than in China, South Korean investors now understand that Vietnam has shortage of electricity, which is a big problem. “They want to know what Vietnam will do to settle the problem,” Hien said.
Head of the Foreign Investment Promotion Agency Do Nhat Hoang has called on local authorities to cooperate with the Ministry of Planning and Investment to give support to investors, or otherwise investors will not come to Vietnam. Hoang said that a manager of Nokia Group once said the group wanted to invest in Vietnam, but it has become hesitant after realizing that Vietnam does not give tax incentives to mobile phone producers.
vietnamnet, vneconomy
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