Free trade agreements (FTAs) that Vietnam has signed with its partners have been an important factor attracting foreign investments to the country.
In the first eight months of 2020, Vietnam attracted US$19.5 billion in foreign direct investment (FDI), down 13.7% year-on-year.
There were 1,797 new FDI projects licensed, with registered capital totalling US$9.73 billion, down 25.3% in project numbers but up 6.6% in value compared to the same period last year.
The increase in value showed that new-generation investment attraction policies have proved effective despite negative impact of the COVID-19 pandemic.
Chairman of the European Chamber of Commerce in Vietnam Nicolas Audier said that FTAs that Vietnam signed with Japan, the European Union and the Eurasian Economic Union are helpful for Vietnam’s FDI attraction.
In addition, the Vietnamese Government’s rapid response and measures to help enterprises deal with difficulties caused by the pandemic have helped raise foreign investors’ confidence in the country’s business climate.
The EuroCham Business Climate Index increased from 27% in the first quarter to 34% in April and has remained stable until now. The BCI, which was released in July, also found that more than 25% of European enterprises had benefitted from the Government’s postponement of tax, while around one-in-five had benefitted from a reduction in rent and a suspension of social insurance contributions.
Experts said that Vietnam will welcome big investment flows from the EU and Japan.
According to the Japan External Trade Organisation, the Japanese Government increased the value of an economic support package to US$2.2 billion, which is expected to speed up its businesses’ shifting of investments from China to ASEAN, particularly Vietnam. Currently, around 3,500 Japanese businesses have demand of investing or expanding production in the country.
Jacques Morisset, World Bank Lead Economist and Programme Leader for Vietnam, said he himself and many governments and multinationals believe that the pandemic crisis gives an opportunity for Vietnam to attract more foreign investors.
“A perception that many multinationals will need to diversify because of the crisis, and Vietnam is clearly a country that can host more FDI, so that would be the first opportunity,” he added.
The WB said in its recent report that competitive production costs, a convenient position in Southeast Asia, strong economic efficiency and increasing domestic consumption are Vietnam’s advantages to lure more foreign investments.
The bank’s 2020 Doing Business report, meanwhile, ranked Vietnam 70th out of 190 economies based on two main factors: improved access to credit information through data distribution from retailers and upgraded information technology infrastructure that makes paying taxes easier for most businesses.
To attract new flows of investment, Vietnamese localities are exerting efforts to upgrade infrastructure to create the most favourable conditions for foreign investors.