Recover - Regain - Rebound

Due to the pandemic, FDI to Vietnam is predicted to surge in 2022 after a long hiatus. What is your view on this prediction? What do you think are the driving forces behind this promising outlook?

 FDI commitments and inflows accelerated from the first months of 2022, with a prosperous year tipped for the key capital source. As a result, $2.1 billion in new investment and $1.6 billion in disbursement were recorded, both of which are positive signs confirming the prediction.

Vietnam’s favorable geographic location in the heart of East Asia, golden population structure, lower cost of skilled labor, impressive economic growth, and expansion of investment abroad, together with the shifting of manufacturing philosophies from global businesses now pursuing a “China plus 1” model for their operations, are key factors helping the country remain an attractive destination for FDI.

In addition to these factors, the following will also help propel FDI inflows in 2022.

The government’s strategy of safely and flexibly adapting to the Covid-19 pandemic and the country’s high vaccination rate gives foreign companies confidence to invest in Vietnam and enables the domestic workforce to spring into action.

Vietnam is no longer facing the risk of being labelled “a currency manipulator”, thanks to an agreement between the US Treasury Department and the State Bank of Vietnam (SBV) on currency policy signed in July 2021, which will stimulate multinational corporations to invest in Vietnam.

2022 is when the Regional Comprehensive Economic Partnership (RCEP) comes into force. Moreover, many important free trade agreements (FTAs) Vietnam has signed continue to introduce roadmaps and set the stage for a promising comeback in the year ahead.

The more than $1 billion that Denmark’s Lego Group invested in VSIP Binh Duong and the nearly $1 billion in additional investment by VSIP Group in VSIP Bac Ninh can also be regarded as factors supporting inflows.

Bac Ninh led the country in attracting FDI in the first two months of 2022. The biggest contribution came from VSIP Group, in its “Investment in the construction of urban infrastructure and services at VSIP Bac Ninh” project, which increased its capital by nearly $941 million. As CEO of Industrial Parks at VSIP Group and General Director of VSIP Bac Ninh, can you tell us about the investment climate in Bac Ninh and what you see as the reasons for its success in FDI attraction over the past year?

Bac Ninh is the smallest province in Vietnam in terms of land area but has long been popular as a destination for foreign investors. There are 16 industrial parks and 26 industrial clusters in the province. The unique provincial policy of “2 Less, 3 High, 4 Ready” promoted investment attraction despite the significant challenges in 2021.

Under “2 Less”, local authorities selectively prioritize projects using less land and less labor.

 

The policy of “3 High” - high investment, high budget contributions, and high-tech content - is suitable for investors bringing new and modern technologies. The local manufacturing and processing industry is improving in regard to science and technology and Industry 4.0. As a result, the proportion of high-tech industrial production has jumped to 86 per cent.

And “4 Ready” consists of being ready as an investment location, ready with workforce, ready for reform, and ready to support. Improving the quality, professionalism, and transparency of policies and laws, reforming its business environment, and streamlining administrative procedures, especially those relating to land and site clearance, are significant achievements that “4 Ready” has brought about.

In the first three months of 2022, Singapore was  Vietnam’s largest investor, after it injected nearly $941 million into the project at VSIP Bac Ninh. So, as a Singaporean investor, why do you think more and more Singaporean businesses choose Vietnam as their investment destination? 

Singaporean investors eyed industrial real estate and logistics in Vietnam some years ago. They already planned their business for it. Now is the time to turn such plans into reality, diversifying and expanding their business and capturing new opportunities.

2022 marks Singapore’s second consecutive year as top investor in Vietnam. The following reasons explain why Vietnam remains the first stop for Singaporean investors.

Firstly, Singaporean enterprises are attracted to Vietnam’s economic growth, which is considered fast globally, with a stable year-on-year rate of 6.8 per cent.

Secondly, Vietnam’s large domestic market, with an expanding middle class, is expected to grow at 9.2 per cent next year and is a magnet for drawing investment from Singapore. Moreover, its golden population structure plays a crucial role in providing a talent pool and skilled workforce.

The strong bilateral relationship between Vietnam and Singapore is another reason. In 2021, Vietnam was Singapore’s tenth-largest trading partner, while Singapore was Vietnam’s sixth-largest trading partner. In the same year, the two countries affirmed their cooperation at the bilateral and ASEAN levels. Both agreed to expand cooperation to new growth areas such as the digital economy, cyber security, clean energy, sustainable development, and smart cities. The recent State visit by State President Nguyen Xuan Phuc to Singapore, in February, helped translate these affirmations into agreements and MoUs, laying the groundwork for the recovery of the two economies and new opportunities for Singaporean firms.

FTAs also propel FDI inflows from Singapore. Vietnam has comprehensive trade links, given its 14 FTAs with more than 50 economies worldwide, enabling manufacturers venturing into the country to enjoy low tariffs and access greater chances to export their products to leading markets such as the EU, the US, Japan, and Australia. Vietnam and Singapore are also signatories to nine FTAs. Moreover, they are the only two ASEAN countries to have signed FTAs with the EU and the UK, which presents them with significant cooperation potential to tap into these two markets. In particular, Vietnam and Singapore are highly complementary rather than competitive, enhancing the prospects of bilateral cooperation in penetrating the EU and UK markets.

Finally, eleven projects of VSIP Group - a symbol of Vietnam-Singapore Friendship and Cooperation, with total investment capital of about $17 billion, annual export value of about $35 billion, and nearly 300,000 new jobs - are also effectively encouraging Singaporean firms to shift their investment to Vietnam.

2022 marks the 15th anniversary of the VSIP JSC. What are your thoughts on this occasion?

Back in 2007, rising on the success in southern Vietnam, the VSIP Group embarked on its expansion to northern Vietnam with the establishment of the VSIP JSC. As a result, its footprint in the north has enormously expanded with the key main four integrated townships and industrial parks and the ongoing and upcoming project scale. Today, we are supplying production infrastructure to 210 customers from 30 countries and territories, with total investment of $6 billion, and creating jobs for more than 100,000 domestic and foreign workers.

The 15th anniversary of establishment is a great time to look back on what the company has gone through, be proud of what has been done, and take it as a driving force for the year to come, with lots of hope and prosperity. Fifteen years for a business is a long journey, with numerous changes and many daunting challenges.

Our commitment to building smart, safe, inclusive, and sustainable parks and the long-term strategy to drive growth sustainably for the company, our business partners, and local communities will continue to grow from strength to strength and remain clear. We will continue to grow our footprint by actively developing more expansion plans.

The company's success (despite the challenges) is primarily attributed to the entire team’s good teamwork, strong perseverance, and “Never Give Up” attitude. I am very proud of the team.

Employees are a company’s greatest asset; they’re your competitive advantage. Therefore, you want to attract and retain the best; provide them with encouragement, and make them feel they are an integral part of the company’s mission. Regardless of its size, no company can win over the long run without energized employees who believe in the mission and understand how to achieve it.