Despite the unfavorable international context, France maintains its leading position in attracting investment, not only in the Eurozone, but also across Europe.
To better understand how France has maintained its attractiveness, Nguoi Dua Tin had an interview with a group of experts at the Business France/French Embassy in Vietnam (Business France/Ambassade), represented by Mr. Yann FROLLO DE KERLIVIO - Commercial Counselor, French Embassy in Vietnam - Director of Business France in Vietnam, and Mr. Pierre MARTIN, Deputy Economic Counselor, French Embassy in Vietnam.
The Arc de Triomphe (L'arc de triomphe de l'Étoile) in Paris, France. Photo: Expert Investor
Nguoi Dua Tin (NDT): France is one of the leading economies in Europe. Since 2017, the French government has promoted a broad reform program to support businesses, including encouraging investment and employment, especially through reducing corporate taxes; strengthening public policies that support business growth and innovation; resetting the social model by promoting occupational mobility; simplifying public administration... So, in your opinion, what is the most important thing in this reform program?
Mr. Yann FROLLO DE KERLIVIO : All these reforms are interdependent and address different sectors of the economy. They are all necessary to address the needs of industry players and meet the challenges of the future economy.
These reforms – whether related to taxes (reducing the corporate income tax rate to 25%, the fixed capital gains tax rate at 30%, or cutting the production tax), or reforming the Labor Code, the Business Growth and Transformation Action Plan, and simplifying administrative procedures – complement each other in creating a favorable environment for domestic and foreign businesses to invest in France.
These reforms are now complemented by ecological planning, which aims to make France a leader in green industry in Europe. The Green Industry Bill, the Nuclear Acceleration Act and the Renewable Energy Acceleration Act, which will soon be combined with France’s National Low Carbon Strategy, will set targets for decarbonised industry and a circular economy.
Business France/Ambassade has initiated discussions on cooperation on green finance and budgeting with the Vietnamese Ministry of Finance to share experience on these issues.
Mr. Yann FROLLO DE KERLIVIO – Commercial Counselor, French Embassy in Vietnam – Director of Business France Trade Agency in Vietnam
These laws are also implemented by the ambitious “France 2030” plan, which aims to support investment in breakthrough innovations and technologies to facilitate decarbonization and increase industrial competitiveness. With a budget of 54 billion euros, France 2030 will allocate half of its funding to emerging markets, and the other half to decarbonization initiatives.
Investor: Could you tell us how these reforms have impacted the business environment in France after 6 years of implementation?
Mr. Yann FROLLO DE KERLIVIO : France has undergone a major transformation over the past decade, and the facts prove it, with France ranked as the top destination for foreign direct investment (FDI) projects in Europe for the fourth consecutive year, according to the EY 2023 Survey on France Attractiveness.
The gains from business-friendly reforms since 2017 have been significant. Unemployment has reached its lowest level since 2008, at 7.1% in the first quarter of 2023. Between 2021 and 2022, 200 new factories have been built. The French economy remains resilient in 2022, with solid growth forecast for 2024.
This new, more flexible framework benefits both new entrants and French companies, which are potential customers, partners or suppliers for foreign investors.
Today, France's attractiveness depends on its ability to respond competitively to the ecological challenges we face and create a sustainable and decarbonized industry.
Investor: In addition to being the leading country in Europe in attracting FDI for four consecutive years, France has also achieved a "highlight" on its journey of re-industrialization when, of the more than 1,200 FDI projects in 2022, 40% are related to the industrial sector. In your opinion, what makes this "highlight"? Is it thanks to the policies of the French Government or thanks to the businesses themselves?
Mr. Pierre MARTIN : Success comes from the fact that the French Government's policies have addressed the needs of businesses and industries, bringing about mutually beneficial results.
Reindustrialization – through low-carbon industry – is one of the priorities of the French Government’s economic policy. Since 2017, the French Government has been proactively pursuing reindustrialization and investing in the industries of the future with the France 2030 plan. The reforms have resulted in a more business-friendly environment and in meeting the need to reduce greenhouse gas emissions.
The top priority is to understand the needs of businesses to facilitate the establishment of industrial facilities in France. Thanks to reforms, France has been able to halve the time it takes for businesses to obtain a permit to operate a site – this is in line with the trend in all other European countries.
France can also offer pre-developed sites, which only require the necessary administrative procedures. Under the France 2030 plan, 50 “turnkey” sites will be selected by the end of 2023, which will then be gradually developed.
Mr. Pierre MARTIN, Deputy Economic Counselor, French Embassy in Vietnam
There will be sites set aside for gigafactory projects, and a separate, even simpler and faster process will be introduced under the Green Industry Bill.
In addition, highly skilled human resources are one of the main criteria for all industries today. Therefore, a large investment in skills has been made within the framework of the Skills Investment Plan worth 15 billion euros over 5 years. This plan gives low-skilled human resources the opportunity to improve their skills and meet the needs of the French economy in the short term (deficit areas) and the long term (digital and environmental transformation).
The France 2030 plan earmarks €2.5 billion for training in the professions of the future, with the aim of training 400,000 people a year, through the selection and funding of innovative training programmes, such as quantum training, and 56 “work-study” schools that will train 10,000 young people a year. The Green Industry Bill sets out measures to ensure that 50,000 engineers graduate each year by 2027.
At the same time, France has a unique advantage in the industrial transition with a competitive energy model thanks to its low-carbon electricity mix. With 60g CO2/kWh, France has the lowest carbon emissions in its energy mix in the world. France can also guarantee attractive energy price conditions for producers.
Therefore, French government policies have responded to the needs of businesses in the industry by trying to provide an optimal business environment, allowing the process of re-industrialization to begin.
Investor: Also about the story of attracting FDI. Currently, investment projects are not only concentrated in Paris and its surrounding areas but have spread to many cities and regions across the country. This is quite different from Vietnam where foreign investors often focus on investing in large cities with favorable infrastructure such as Ho Chi Minh City and Hanoi. In your opinion, what makes this difference?
Mr. Yann FROLLO DE KERLIVIO : Indeed, in France, 43% of investment decisions concern municipalities with less than 20,000 inhabitants, and manufacturing projects are set up nationwide, with three-quarters of the projects in municipalities with less than 20,000 inhabitants. It can be said that foreign investors create jobs and added value throughout France.
One of the explanations for this is the huge amount of work done by the territories to meet the needs of investors to speed up and facilitate access to industrial zones.
Regions in France have located “ready-to-use” industrial zones on their land, where administrative procedures related to urban planning, preventive archaeology and the environment have been planned in advance to ensure that investors are provided with land ready for immediate use or in the very short term.
The efforts of the regions to highlight their territorial strengths and the highly effective support of regional and local development agencies to provide practical support to industrial projects throughout France have helped them attract new industrial projects.
The newly built Billy-Berclau Gigafactory ACC battery factory, in Billy-Berclau, northern France. Photo: Automotive News Europe
Investor: Finally, please tell us what Vietnam needs to do to be able to create "brilliant marks" like France did?
Mr. Yann FROLLO DE KERLIVIO : In recent years, Vietnam has proven to be an attractive destination for foreign investors in Asia, mainly due to its tax incentives, well-educated and relatively cheap workforce, strategic location, and trade policies that place the country at the center of a network of free trade agreements (FTAs).
However, some of these advantages will erode in the coming years as Vietnam's population begins to age, labor costs and energy prices rise, a minimum corporate income tax is imposed, etc.
To maintain and increase its attractiveness, Vietnam can undertake reforms to make its overall business environment less costly and more predictable for foreign companies. That means strictly implementing trade agreements, including the EU-Vietnam Free Trade Agreement (EVFTA), reducing operating costs by speeding up necessary transport infrastructure, and simplifying administrative procedures for companies – both Vietnamese and foreign.
Foreign businesses in energy, pharmaceuticals and many other sectors will also appreciate greater implementation and stability in terms of industrial policy and planning.
In addition to improving the transparent, rules-based institutional environment, investment in education and innovation is also needed to continue attracting more value-added investments and ensure the country's long-term growth.
Investor: We would like to thank Mr. Yann FROLLO DE KERLIVIO and Mr. Pierre MARTIN representing Business France/Ambassade for answering the interview .
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