“The next 3 to 5 years will be very important for Vietnam in attracting FDI”

That is the opinion of Mr. Jimmy Koh, Director of Partnerships and Strategic Marketing, Foreign Investment Advisory Division, UOB Bank (Singapore).

Explaining this opinion, Mr. Jimmy Koh said: “As the global supply chain continues to be restructured, every country in the region will compete to attract foreign investors to set up operations in their country. This is the stage that will shape the new equilibrium of FDI. I think this is the golden time for Vietnam to reach out and attract large corporations that are shifting to Southeast Asia, including Vietnam.”

Mr. Jimmy Koh, Director of Partnerships and Strategic Marketing, Foreign Investment Advisory Division, UOB Bank (Singapore).

How do you evaluate the recent FDI attraction in Vietnam?

The global supply chain is undergoing significant changes, largely influenced by geopolitical factors, especially tensions between China and the West. This has led to a major restructuring of the global supply chain, with many companies now shifting their operations to Southeast Asia, including Vietnam.

Vietnam is a particularly interesting case. ASEAN has long been seen as a potential manufacturing hub – this was seen in the 1990s and early 2000s, before China joined the World Trade Organization (WTO). However, Vietnam did not play a significant role then.

But now, as companies rethink their global strategies, Vietnam has emerged as an important destination thanks to its large labor force, large domestic market and growing middle class, which offer many opportunities for growth. Going forward, if structural challenges in global supply chains and efforts to diversify supply chains persist, I believe Vietnam will continue to be a prominent destination for FDI.

A notable statistic is that while global FDI flows decreased by about 35% from 2015 to 2023, FDI into ASEAN increased by 90% during the same period. This clearly reflects the strong shift and diversification of global investment flows into the ASEAN region and Vietnam will continue to be an important part of that trend.

So, in your opinion, which sectors are attracting the most attention from FDI enterprises?

Much of the interest from FDI enterprises revolves around the need to diversify supply chains. Many products previously produced in China are now moving elsewhere, and Vietnam is emerging as a destination to benefit from this trend.

The main sectors attracting investment include industrial manufacturing, consumer goods and electronics. Although not necessarily high-end electronics, the mid-range segments with added value through assembly are dominating. Initially, many technology companies chose Ho Chi Minh City to set up shop, but there is now a shift to Hanoi due to its proximity to China, creating logistical advantages and opening up more growth opportunities.

In addition, the number of new industrial zones being established in Vietnam is also increasing and this demonstrates the great growth potential that we can expect in the coming years thanks to these changes.

So, considering the competition for FDI among countries in the region, in your opinion, what unique advantages does Vietnam have to attract the attention of FDI enterprises?

The next three to five years will be crucial for Vietnam. As the global supply chain continues to restructure, every country in the region will compete to attract foreign investors to set up operations in their country. This period will shape the new equilibrium of FDI. I believe this is the golden time for Vietnam to reach out and attract large corporations that are shifting to Southeast Asia, including Vietnam.

So what are Vietnam’s advantages? I believe that each country in ASEAN has its own distinct role to play. In particular, I think Vietnam has a unique and prominent role in areas such as electronics and consumer goods - industries in which Vietnam has established its position.

In particular, when mentioning the textile and garment sector of Vietnam, everyone immediately thinks of the quality that the textile and garment industry of Vietnam brings. In addition, Vietnam is increasingly moving deeper into the low- to mid-range electronics segment, and Vietnamese people are fully capable of taking on this role. The important issue is how we will position our different role, because it will not be the same as Thailand, Malaysia or Indonesia. However, I believe that the ASEAN region has enough potential for all countries to share development opportunities.

So, what measures is UOB implementing to support FDI enterprises to expand their business operations in Vietnam?

When companies enter a new market, their first need is not banking services, but building relationships with government agencies. One of the important things we do at UOB is to facilitate the connection between companies and government agencies in the host country.

We also help businesses connect with local supply chains, navigate the regulatory landscape and establish partnerships with trade associations, staffing firms, law firms and accounting firms. Through this holistic approach, UOB provides end-to-end support to businesses, from initial setup to full operations, ensuring they are well-positioned to succeed in Vietnam.

Vietnam is currently implementing and promoting green sectors, such as renewable energy sectors and green equity economy. And as the country is committed to achieving net zero emissions by 2015. So, what initiatives or financial solutions has UOB introduced to support green businesses in Vietnam?

The journey to sustainability is a long one. At UOB, we advocate a “just transition” because we recognise that businesses cannot become completely green overnight. Our role is to help them make the transition to sustainability over time.

For example, we work with factories to install solar panels, a growing demand from large Western consumer companies. We support our customers throughout this transition, providing them with the tools and guidance they need to move towards a greener future.

What is your forecast for Vietnam and FDI attraction in the last months of 2024?

Last year, the numbers were somewhat bleak, partly due to the global economic downturn. However, investment in ASEAN and Vietnam remained stable. Although I do not expect a sharp increase in FDI due to the global economic situation, which is still full of uncertainties and challenges, Vietnam and ASEAN will continue to be attractive destinations for investors.

We have seen interest from German, Japanese, Taiwanese and Korean companies, which shows that it is not just Chinese companies investing in Vietnam. This diversification of investors reinforces Vietnam’s position as a key player in global FDI.

Source: https://baodautu.vn/tu-3-den-5-nam-toi-se-rat-quan-trong-doi-voi-viet-nam-trong-viec-thu-at-fdi-d226322.html