On that journey, opportunities are wide open but also pose many challenges, requiring Vietnam to act quickly and decisively to keep up with the rapidly changing context of the world economy.
Lesson 1: Sweet fruits from economic diplomacy
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Production of dyed textile products at Jasan Vietnam Textile Dyeing Co., Ltd., Pho Noi B Industrial Park, Hung Yen province. (Photo: DANG ANH) |
The Law on Foreign Investment promulgated in 1987 opened up opportunities for Vietnam to attract foreign capital to promote industrialization, modernization and development towards building an open economy, integrating with the region and the world.
Along with specialized laws on investment attraction, the signing and implementation of free trade agreements (FTAs) also make significant contributions, creating conditions for foreign capital to increasingly flow into Vietnam.
On January 11, 2007, Vietnam officially became the 150th member of the World Trade Organization (WTO), marking the country's comprehensive integration into the journey of innovation and international integration. To date, Vietnam has signed and implemented 16 FTAs, opening up great opportunities for trade activities as well as attracting foreign direct investment (FDI).
Ideal destination in the eyes of investors
Ms. Phi Thi Huong Nga, Director of the Department of Industrial Statistics (General Statistics Office) said that Vietnam has signed FTAs with all major economic partners around the world such as Japan, China, the US, the European Union (EU), Russia,...
Notably, new-generation FTAs, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Vietnam-European Union Free Trade Agreement (EVFTA), and the Vietnam-United Kingdom of Great Britain and Northern Ireland Free Trade Agreement (UKVFTA), create favorable conditions for foreign investors to come to Vietnam.
Figures from the Ministry of Industry and Trade show that FDI capital from the UK has clearly improved after the implementation of the UKVFTA, reflected in a strong increase in both the number of projects and newly registered capital.
By the end of 2023, the UK had 550 direct investment projects in Vietnam with a total registered investment capital of about 4.3 billion USD, ranking 15th out of 143 countries and territories with direct investment in Vietnam.
“In just a short time after the implementation of the UKVFTA, the number of projects and investment capital from the UK in Vietnam has doubled. There is clearly a great deal of attention from UK investors to Vietnam,” said Ngo Chung Khanh, Deputy Director of the Multilateral Trade Policy Department (Ministry of Industry and Trade), emphasizing that recently, the UK has invested in many large green energy projects in Vietnam, demonstrating the orientation of the two governments in promoting climate change prevention, green energy development, and green economy.
Not stopping there, the UK's recent official signing of the CPTPP accession agreement will further boost two-way economic, trade and investment relations in the coming time.
Mr. David Johnstone, Head of FTAs Implementation, UK Department for Business and Trade, assessed that, in addition to the obvious benefits in terms of tariffs, CPTPP also creates huge benefits for both countries in integrating more deeply into each other's supply chains; at the same time, facilitating the business process of enterprises on both sides and creating breakthrough growth potential with the prospect of expanding the agreement in the future.
EVFTA is also one of three new-generation FTAs that Vietnam is implementing. Since the agreement came into effect, EU countries’ investment capital in Vietnam has increased from 18 billion USD in 2016 to 28.91 billion USD in 2023.
The Business Confidence Index report released by the European Chamber of Commerce in Vietnam also shows that Vietnam’s global investment attractiveness remains strong, with 63% of surveyed businesses ranking Vietnam in the top 10 FDI destinations. More notably, 31% of businesses ranked Vietnam in the top 3, of which 16% praised Vietnam as the top destination for FDI capital flows.
Vietnam Industry Focus 2023 published by Savills also emphasized that Vietnam has signed 16 FTAs and is negotiating three more; of which, EVFTA has marked an important turning point in trade and investment relations between Vietnam and European countries.
Regarding the US market, Mr. John Campbell, Deputy Director, Head of Industrial Services, Savills Vietnam, said: President Joe Biden's visit and the upgrading of Vietnam-US relations to a Comprehensive Strategic Partnership are expected to increase the interest of investors from this market in the coming time.
Play with the big players
In addition to continuing to negotiate new FTAs, since the second half of 2023, Vietnam has upgraded its Comprehensive Strategic Partnership with three major partners, the US, Japan and Australia, while deepening its Comprehensive Strategic Partnership with China in many important cooperation contents such as science and technology, semiconductors, new-generation official development assistance (ODA), green economy, digital economy, etc.
It can be seen that, along with the effects of implementing the Law on Foreign Investment, economic diplomacy activities have actively supported the promotion, dissemination, and removal of trade barriers so that Vietnam can expand its market and attract external resources for the development of industries that can create breakthroughs such as semiconductor technology, artificial intelligence (AI), and clean energy conversion.
Deputy Foreign Minister Le Thi Thu Hang shared: Economic diplomacy has been implemented drastically and comprehensively in recent times, with profound changes in quality and quantity, achieving many important results, including contributions to attracting high-quality FDI capital and new-generation ODA, forming favorable frameworks to attract resources for green transformation, digital transformation, innovation, and deeper participation in regional and global supply chains.
Notable examples include Vietnam signing the Just Energy Transition Partnership (JETP) with an initial investment of 15.5 billion USD; the world's first carbon neutral factory project worth 1.3 billion USD by the Lego Group or the Research and Development Center worth 220 million USD by the Samsung Group.
From the perspective of an economic expert, Dr. Vo Tri Thanh believes that the important results in foreign affairs in general and economic diplomacy in particular have contributed to creating a favorable and stable international environment for economic development; attracting resources, clearly demonstrated through achievements in the fields of economics, trade, investment attraction, production and business.
This process also contributes to institutional reform, improving the investment and business environment, creating attractiveness and attracting international investment sources to Vietnam. Not only that, Vietnam has also begun to "play with the big players", participating in a more proactive role when joining hands with other countries to build and establish new rules of the game on international trade, new generation FTAs with high quality such as CPTPP.
Clearly, the diplomatic sector is playing an important role in connecting Vietnam with “big players” and major investors in the world. However, this also requires us to act flexibly and react quickly so as not to be slow and miss opportunities.
Master Nguyen Tran Minh Tri, Institute of World Economics and Politics, Vietnam Academy of Social Sciences, said that economic diplomacy has truly become the central task of the entire Vietnamese diplomatic sector, creating a strong change from thinking, awareness to action in ministries, branches, localities and enterprises.
In addition, economic diplomacy has been helping industries, fields, localities and businesses expand diverse spaces for development, making Vietnam an important link in regional and global economic links.
In the context of current geopolitical fluctuations and technological revolution, Mr. Tri recommends that economic diplomacy should continue to be implemented according to the major orientations of the Party and the State's policies.
That is to focus and concretize the results of attracting high-quality FDI flows for high-tech industries; increase the scale of international tourists to Vietnam; expand and diversify markets, products, supply chains, increase export orders for textile, footwear, seafood, wood and fruit and vegetable industries, ensuring both short-term benefits and long-term benefits; accelerate the signing of FTAs, consolidate the market share of Vietnamese goods in traditional markets and expand niche markets and untapped potential markets.
In recent years, Vietnam has effectively implemented three strategic breakthroughs in institutional reform, infrastructure development, and human resource quality improvement. Vietnam welcomes and welcomes international investors to invest in the spirit of “harmonious benefits, shared risks”, equality, sincerity, mutual benefit, and respect for international law.
Vietnam's orientation is to selectively attract investment, prioritizing projects in emerging, high-tech, high-value-added, and spillover and connectivity fields, especially serving new growth drivers, promoting digital transformation, green transformation, and strongly developing a number of new, breakthrough, strategic fields such as semiconductors and artificial intelligence (AI).
Minister of Planning and Investment NGUYEN CHI DUNG
(To be continued)
Source: https://nhandan.vn/thu-hut-fdi-truoc-buoc-ngoat-lich-su-post816288.html
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