Easing entry restrictions bodes well for FDI attraction in 2022

The Ministry of Health recently issued a document on COVID-19 pandemic prevention and control for people entering Vietnam. As of January 1, 2022, all fully vaccinated arrivals with negative COVID-19 test results will only need to self-quarantine at home or their place of accommodation for three days upon entry, as opposed to the previous period of seven days.

Adam Sitkoff, executive director of the American Chamber of Commerce (AmCham) in Hanoi, emphasised that this timely and effective regulation will help to reduce the burden placed on visitors, save time and money, and facilitate greater investment inflows into the country.

The global research team from HSBC also expressed their belief that the Vietnamese economy can regain its GDP growth rate of 6.8% next year through an upsurge in investment capital flows, particularly in the manufacturing industry.

This move is anticipated to accelerate exports, especially when the enforcement of several free trade agreements (FTAs) over the past two years offers numerous advantages for businesses, they emphasised.

Seck Yee Chung, a lawyer who runs the Baker & McKenzie law firm, said although entry restrictions have negatively impacted the investment climate, global and regional private equity firms are seeking business opportunities locally.

With social distancing measures put in place in the third quarter, Vietnamese GDP growth rate this year would hover between 3% and 3.5%, he added.

But he was confident that the country’s economic growth rate will regain momentum as international borders are fully reopened, helping it secure a crucial position within the global supply chain.

Aside from China, foreign investors will look to other Asian countries, including Vietnam, for their manufacturing operations moving into the post-pandemic period, while simultaneously directing their investments into the digital economy and mergers and acquisition (M&A) activities , Chung stressed.

According to a recent report released by Maybank Kim Eng,  a leading investment broking and securities group in Asia, despite the emergence of new variants of the SARS-CoV-2 virus posing a number of risks, Vietnam remains optimistic about future economic prospects due to its high vaccination rate.

In fact, over 70% of the Vietnamese population has been vaccinated with at least one dose of the COVID-19 vaccine, while more than half have been fully vaccinated by the end of November. The current figures are much higher as Vietnam is accelerating its vaccination campaign.

However, Adam Sitkoff, the Amcham representative, warned that the reopening of borders and the emergence of the Omicron variant would entail a real risk of a higher COVID-19 infection rate and impact foreigners’ plans to come to Vietnam for business or tourism purposes.