Simpler tax procedures and better infrastructure will help Vietnam compete for foreign investment amid supply chain shifts triggered by the Covid-19 pandemic, foreign experts say.
South Korean businesses are leaving China and Vietnam is among the new destinations they are considering, Hong Sun, deputy chairman of the Korea Chamber of Commerce in Vietnam (KoCham) said at a recent meeting on attracting foreign direct investment to Vietnam.
He said Samsung had closed its last smartphone factory in China last year and plans to shut down its sole TV factory in the country by November.
“Korean businesses are preparing to move from China to other countries including Vietnam, Indonesia and India,” he said.
The FDI attraction game therefore is not a competition between localities but between countries, he added.
Indonesia, for example, was trying to persuade electronics producer LG to set up a $10-billion battery factory in the country with many tax incentives, he said.
Vietnam has its advantages, said Mary Tarnowka, executive director of the American Chamber of Commerce in Vietnam (AmCham). She said its location, high global integration and a stable political situation were some of the advantages.
Its success in controlling the Covid-19 pandemic can also attract foreign investors when they shift their supply chain. However, Vietnam also needs to simplify its business and tax procedures and improve infrastructure to welcome more investors, she added.
Echoing her, Kyle Kelhofer, International Finance Corporation (IFC)’s country manager for Vietnam, said as the Covid-19 pandemic opens new doors for Vietnam in attracting FDI, the country needs to reduce unnecessary costs for businesses to make their investment process more convenient.
A World Bank study presented at the meeting showed that 91 percent of multinationals will continue to stay in Vietnam for at least the next three years, and 46 percent of companies in the country are likely to expand their operations in the same period.
Registered FDI in Vietnam in the first eight months fell to a four-year low of $19.54 billion due to pandemic impacts, according to the Foreign Investment Agency under the Ministry of Planning and Investment.
By Phuong Anh @ VNExpress