Vietnam’s economy has seen impressive growth in recent years and the business environment has improved. However, the majority of foreign investors are still missing out on many opportunities here, says Le Huu Quang Huy, former investment counsellor of the Vietnamese Embassy to Japan.
Previously, personal income in this country was low, so Vietnamese people paid little attention to services such as finance, insurance, healthcare, and education. Lately, living standards have improved a great deal, leading to more demand for such services.
Vietnam has signed and implemented many commitments to open its market and offer protection to investors, regulated in both bilateral and multilateral free trade agreements. If investors have not kept up to date on this information, they may be losing out on opportunities to increase their market share.
A number of foreign-invested enterprises (FIEs) face problems while trading or manufacturing in Vietnam. In such cases, they should work together to raise their voices for local authorities to hear.
FIEs need to strengthen relations with domestic partners and the local labour force by increasing training opportunities, with some 80 per cent of workers lacking adequate training, and increase the rate of technology transfer with their Vietnamese partners. The government should also ensure a mechanism to support domestic firms to connect with FIEs, and improve their capacity to absorb technology transfer, so they can contribute more to the global supply chain.
Supporting domestic firms and organising training programmes for the labour force may increase production costs, but it will contribute to greater effectiveness in the long term. In reality, it is a recipe for success for many businesses, especially for those in the processing, manufacturing, construction, and agriculture sectors.
Vietnam also needs to make certain changes to create better conditions for foreign investors to implement these recommendations. Accordingly, the government needs to expedite the completion of the national information system on foreign investment. The system was designed in 2019, but so far, it has not been as effective as expected. Data on foreign-backed projects has not been recorded in full, and the communication network between FIEs and relevant state management agencies has yet to be completed.
Moreover, the government must focus on energy sources to improve the capacity of supporting industries, promote incentives for foreign capital, as well as enact policies that encourage technology transfer.
In addition, one way to help foreign investors gain a better understanding of Vietnam’s economy is to reform the way the country promotes itself. The authorities need to proactively build promotion strategies with specific investor profiles in mind. The right objective, project, and target audience for different areas of investment must be considered to entice fresh capital from overseas. They should also pay attention to retaining existing investors.
Authorities must also be open to dialogue and to receiving investor feedback and recommendations, and be decisive and swift when handling difficulties related to ongoing projects.
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By Le Huu Quang Huy