TPP opens up positive signs with strong foreign investment inflows

If the TPP is signed, Vietnam is considered one of nations which have enjoyed a lot of benefits such as high influx of foreign investments thanks to preferential tariffs, and low domestic production costs.

The US-based Intel group said 80% of the group’s microprocessors will be produced in Vietnam. According to statistics from Samsung, 50% of the company’s mobile phones are also manufactured in the country. These figures have shown that Vietnam is strategic destination of the world’s leading groups in the global supply chain.

Professor Nguyen Mai, President of Vietnam Association of Foreign Invested Enterprises said major projects of the world’s leading groups like Samsung, Nokia, LG and Intel have formed a wave of foreign investment in Vietnam.

For example, Samsung’s investment capital in Vietnam reached US$650 million in 2007, US$11.2 billion in 2014 and is expected to hit US$20 billion in the coming years. Meanwhile, Nokia’s investment in Vietnam increased from US$150 million to US$350 million in 2014 and the figure might amount to US$1.5 billion this year when Nokia’s factory have shifted from Hungary to Vietnam.

This is a good trend as these groups think that Vietnam is totally capable of meeting the requirements of hi-tech industries and might become a future workshop of the world.

According to statistics from the Foreign Investment Agency under the Ministry of Investment and Planning (MPI), foreign investments in Vietnam have increased sharply in terms of capital and projects recently. Until 2015, the country has attracted US$22.760 million in foreign investment capital, up 12.5% compared to the previous year’s corresponding period.

Since the beginning of this year, several localities in the country have kicked off trade promotion programs to attract foreign investment. 

For example, Hanoi’s People’s Committee has recently announced 11 investment projects which focus on such fields as industry, trade, service, technical infrastructure, and urban infrastructure. Hanoi now ranks third among 63 provinces in attracting foreign investment.

Nguyen Gia Phuong, Director of the Hanoi Investment, Trade and Tourism Promotion Centre said “We have made thorough preparations for the implementation of feasible projects by offering incentive investment policies and speeding up land clearance and planning”.

In addition, there have been several factors which are expected to make a positive impact on prospects of attracting foreign investment in the coming time including administrative reforms, favourable investment climate, competitive capacity, and the amended Enterprise Law and Investment Law.

Meanwhile, indirect foreign investment capital source is also forecast to play an important role in stimulating the financial market, improving the efficiency of operations and enhance transparency among businesses. 

According to economists, this is an important channel which has attracted capital sources for the national economy in the long-term, especially in the context when Vietnam is restructuring the economy and providing legal corridors for foreign investors in an open and transparent manner.

Therefore, Vietnam’s participation in TPP will help speed up the economic restructuring process, attract strong investment inflows and contribute to the country’s economic development.

Pham Minh Tuan, Brokerage Manager of Saigonbank Berjaya Securities Joint Stock Company (SBBS) analysed that when Vietnam’s economy has developed, there will be an inflow of foreign investment in Vietnam through both direct and indirect channels. 

Indirect investment can be shown through the purchase of shares of Vietnamese companies or through the acquisition and merger of foreign enterprises. “Joining the TPP will help the country seize huge opportunities in attracting indirect investment capital from foreign investors”, said Mr Tuan.