Promote FTA negotiations, attract investment in fundamental industries

Vietnam – an attractive market for foreign investors

Speaking at the European Regional Trade Counselors Conference held in Italy on July 18 and 19, 2024, on the content of promoting cooperation and attracting investment to develop fundamental and supporting industries, Mr. Nguyen Duc Thuong - Trade Counselor of the Vietnam Trade Office in Switzerland said that Vietnam and Switzerland still have a lot of potential to promote investment cooperation in the industrial sector.

Citing statistics from the General Department of Vietnam Customs, Commercial Counselor Nguyen Duc Thuong said, As of the end of June 2024, Switzerland had 214 valid investment projects in Vietnam with a total registered capital of 2.028 billion USD, ranking 21st out of 146 countries and territories investing in Vietnam.

Mr. Nguyen Duc Thuong - Commercial Counselor of the Vietnam Trade Office in Switzerland said that Vietnam and Switzerland still have a lot of potential to promote investment cooperation in the industrial sector.

In the first 6 months of 2024 alone, Switzerland had 7 newly licensed FDI projects with a total registered capital of 1.14 million USD. In addition, there were 3 adjusted projects with an additional adjusted capital of 104.73 million USD, 7 capital contributions to buy shares with a value of 0.38 million USD. The total registered investment capital in the first 6 months of 2024 reached 106.25 million USD, an increase of more than 6.3 times compared to the same period in 2023. Switzerland ranked 12th among countries investing in Vietnam in the first 6 months of 2024.

The registered investment capital in the first 6 months of 2024 from Switzerland increased sharply because Nestlé Vietnam has just decided to invest an additional 100 million USD to double the processing capacity of high-quality coffee lines at the Nestlé Tri An factory in Dong Nai province, bringing the total investment capital at this factory to more than 500 million USD.

Analyzing the advantages and disadvantages of attracting Swiss investment in Vietnam, Commercial Counselor Nguyen Duc Thuong said that, regarding advantages: According to statistics from the Swiss Federal Department of Economic Affairs, there are currently about 60 Swiss enterprises directly investing in Vietnam. Swiss companies have created thousands of jobs in Vietnam through investment projects, making positive contributions to Vietnam's socio-economic development. Most of Switzerland's investment focuses on the processing and manufacturing industries.

Through surveys of associations and local businesses, Vietnam is an attractive market for foreign investment and Switzerland thanks to the following factors:

First, rapid economic growth: Vietnam is one of the fastest growing economies in Asia with a steady GDP growth rate. This dynamic growth creates an attractive environment for investment.

Second, it has a strategic location: Vietnam's location in Southeast Asia provides access to major shipping routes and proximity to other major markets, including China, Japan and ASEAN countries.

Third, deep international integration: Swiss businesses highly appreciate the FTAs ​​that Vietnam has participated in, especially new generation FTAs ​​such as EVFTA and CTTPP.

Fourth , a young and dynamic workforce: Vietnam has a large, young and increasingly skilled workforce, which is very attractive to businesses looking for investment opportunities in Vietnam.

Fifth, the political environment is stable, creating peace of mind for foreign investors.

Sixth , the Vietnamese Government offers various incentive policies for foreign investors, including tax exemptions and reductions, land use incentives, etc. Swiss businesses highly appreciate Vietnam's establishment of the first Free Trade Zone in Da Nang in 2025. This will be very attractive to foreign investors.

Seventh, a growing consumer market: With a rapidly growing middle class, Vietnam has an expanding market for consumer goods and services, which could attract Swiss companies in these areas.

Administrative reform to attract investment from Switzerland

In addition to the advantages, investment activities between the two countries still face many difficulties, including the fact that the two countries do not have a bilateral trade agreement: According to local businesses, in the coming time, Vietnam will have to compete in attracting investment, especially with countries in the Asian region such as India, Indonesia, Thailand, Malaysia or the Philippines. The fact that the two sides do not have an FTA is also a challenge for Swiss businesses that want to expand their investment and business in Vietnam. Meanwhile, India just signed an FTA with the EFTA bloc in early 2024. In the ASEAN region, Singapore, Indonesia and the Philippines already have an FTA with the EFTA bloc, while Thailand and Malaysia are also negotiating FTAs ​​like Vietnam.

Along with that are infrastructure shortcomings: Despite improvements, Vietnam still faces infrastructure challenges, especially in terms of transport infrastructure, urban infrastructure, logistics and energy.

Or legal barriers that are sometimes complex and slow, with enforcement of laws and regulations sometimes inconsistent; Limited skilled labor in some specialized fields: While the overall workforce is young and dynamic, Vietnam lacks highly skilled professionals in specialized fields such as high-tech manufacturing and advanced engineering.

Furthermore, intellectual property rights enforcement remains a concern, which can be a barrier to foreign companies, especially in high technology and innovation.

To promote cooperation and attract investment from Vietnam, especially to develop fundamental and supporting industries, the Vietnam Trade Office in Switzerland recommends and proposes.

Firstly, due to the characteristics of the Swiss economy, the fundamental industries that Vietnam can promote to attract investment from this country are: Mechanical engineering (especially precision engineering); Medical equipment; Pharmaceutical chemistry; Information technology - Digitalization; Renewable energy; Food industry...

Second, promote negotiations and signing of FTAs ​​with the EFTA bloc (including Switzerland) to create a favorable legal foundation for trade, investment and industrial cooperation between the two countries. Based on the experience of the FTA between EFTA and India signed in early 2024, it is necessary to add a chapter on Investment Cooperation and Promotion to the FTA to promote investment from Switzerland and EFTA in Vietnam.

Third, continue to promote infrastructure modernization, including transportation networks, energy supply and digital connectivity to reduce operating costs and improve business efficiency.

Fourth, simplify administrative procedures, ensure consistent enforcement of regulations and provide clearer guidance to make it easier for foreign investors to access the business environment.

Fifth, focus on developing a skilled workforce by strengthening the education system, vocational training programs and cooperation with foreign educational institutions, especially in high-tech and specialized fields.

Sixth, strengthen intellectual property protection, improve the legal framework and enforcement mechanisms for intellectual property rights to build trust for Swiss companies, especially those in the technology and innovation sectors.

Seventh, continue to maintain a stable political environment and appropriate macroeconomic policies to create a safe investment environment.

Eighth, promote sustainable business practices and investment in green technology, in line with global trends and Switzerland's capacity for environmental sustainability.

Ninth, strengthen the role of trade and investment promotion agencies, and organize more business forums and networking events to introduce opportunities in Vietnam to Swiss investors.

Finally, taking advantage of the good diplomatic relations between Vietnam and Switzerland, promote closer bilateral cooperation through bilateral cooperation agreements and delegation exchanges.

Source: https://congthuong.vn/thuc-day-dam-phan-fta-thu-hut-du-tu-vao-cac-nganh-cong-nghiep-nen-tang-333863.html