With foreign direct investment (FDI) flows recovering strongly, Vietnam is gradually giving more priority to attracting high-tech FDI.
Bright spot attracting FDI
In 2023, Vietnam's FDI attraction will recover strongly, approaching the level before the Covid-19 pandemic. Entering 2024 - the breakthrough year of the 5-year economic journey in the period of 2021-2025, from the beginning of the year, Vietnam's foreign direct investment attraction activities have been very vibrant with projects worth hundreds of millions of USD. A report from the Foreign Investment Agency shows that in January 2024, Vietnam attracted more than 2.3 billion USD in FDI, up 40.2% over the same period in 2023; the realized capital of foreign investment projects is estimated at about 1.48 billion USD, up 9.6% over the same period in 2023.
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Not only has the value of capital attracted increased, many international organizations have also assessed that Vietnam is emerging as a bright spot attracting FDI in new investment fields such as semiconductors, artificial intelligence, high-tech industry, etc. HSBC Bank's global research department also stated that Vietnam is among the top 3 countries in ASEAN in attracting FDI in the technology sector (along with Singapore and Malaysia). This trend brings hope for Vietnam's recovery when the economic cycle changes.
Regarding the European investor group alone, Mr. Nguyen Hai Minh, Vice President of the European Chamber of Commerce in Vietnam (Eurocham), said that in a recent survey, European businesses not only voted Vietnam in the top 10 investment destinations in the world, in which nearly 20% of surveyed business leaders ranked Vietnam as the number 1 priority. The areas in which European businesses are confident in investing in Vietnam are technology, finance, etc.
As a testament to this appeal, right after the Lunar New Year 2024, Trina Solar - a large corporation in the solar battery industry decided to invest in a production project with a total investment of 454.4 million USD and is expected to officially operate in March 2025. Meanwhile, Hana Micron (Korea), a company specializing in semiconductor packaging and testing, inaugurated phase 2 and increased its total investment in Vietnam to 1 billion USD; LG Innotech (Hai Phong) invested in expanding the project by 1 billion USD in the field of manufacturing electronic products; Group
Shenzhen MTC China invested a total registered capital of 24 million USD to produce routers, digital signal converters, LED lighting and televisions...
According to Associate Professor, Dr. Dinh Trong Thinh, an economic expert, this is an opportunity for Vietnam to create a spread in the use of high technology, apply new labor productivity, and change the entire structure of production in Vietnam. This expectation is completely grounded thanks to the fact that Vietnam has signed 17 Free Trade Agreements (FTAs) with many countries around the world, is in the Top 20 countries with the highest growth rate in the world in 2023, especially with a stable political system, economic growth for decades in a row and always at a high level...
Strengthening solutions to attract high-tech FDI
Increasing the attraction of investment capital into the high-tech sector is a strategy that many localities are closely following. Mr. Hua Quoc Hung, Head of the Management Board of Ho Chi Minh City Export Processing and Industrial Zones (Hepza), said that the city will prioritize attracting investment projects in the fields of high technology, clean industry, projects producing high value-added, environmentally friendly products... Investment projects with low investment capital scale, outdated technology, labor-intensive... will be limited.
Similarly, the People's Committee of Khanh Hoa province has just issued a decision approving the Investment Promotion Program for 2024, focusing on selectively attracting investment in projects that use land economically, save energy, use high technology, clean technology, are environmentally friendly, and have high added value, contributing to promoting rapid and sustainable socio-economic development.
Meanwhile, nationwide, Minister of Planning and Investment Nguyen Chi Dung said that Vietnam will proactively attract and selectively cooperate with foreign investment, aiming for quality, efficiency, technology and environmental protection; prioritizing projects with high added value, high technology content, linkages with domestic enterprises, spillover effects, connecting global production and supply chains, specifically electricity, electronics, semiconductors; renewable energy; high-efficiency agriculture; digital economy, digital transformation; innovation, research and development; and financial centers...
However, besides the good news, there are also many worrying challenges. An expert explained that the high-tech workforce is not large enough to meet the immediate needs of large corporations; investors in high technology have only stopped at the simple packaging, assembly, and manufacturing stages; the global minimum tax has begun its implementation in Vietnam this year, when applying the global minimum tax, all multinational enterprises will be subject to a minimum tax rate of 15%...
When investing in high technology, Associate Professor, Dr. Dinh Trong Thinh also said that investors are very interested in infrastructure such as electricity, water, transmission lines, etc. If these systems are not stable, they cannot research, apply and produce smoothly. Therefore, this expert emphasized that Vietnam needs to avoid frequent power outages like in 2023 and must pay more attention to the story of waste and emissions treatment to meet the requirements of greening the economy and production, helping the products of corporations meet the requirements of reducing emissions according to the general trend.
Regarding the global minimum tax, an expert said that this is a challenge in terms of competitive advantage but an opportunity for Vietnam to upgrade its FDI attraction strategy. Mr. Nguyen Van Toan, Vice President of the Association of Foreign Investment Enterprises, said that to adapt to the new regulations, Vietnam will have to improve the investment environment, high-quality human resources to attract high technology, source technology, and advanced technology. The important thing is to raise the level of Vietnamese enterprises to join hands with foreign enterprises, participate in the value chain to increase profits. The level of domestic human resources and technology will also increase.
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