Mr. Do Nhat Hoang, Director General of the Foreign Investment Agency (Ministry of Planning and Investment). Source: FT
According to the Financial Times (FT), Vietnam is one of the economies that has benefited the most from the global shift in manufacturing away from China as companies seek to safeguard their supply chains amid the escalating trade war between China and the United States.
As a result, Vietnam is now home to significant manufacturing hubs for companies such as Samsung and Foxconn. However, this Southeast Asian manufacturing powerhouse is facing challenges in attracting investment into higher-value, high-tech industries, such as a shortage of skilled labor and power supply. In addition, the country also faces competition for technology investment from other Southeast Asian countries such as Malaysia.
In response, Vietnam is exploring “breakthrough” incentives to attract foreign investors into the fields of semiconductor manufacturing, artificial intelligence, and green energy as it seeks to attract investment into high-tech industries.
“In the context of fierce global competition, Vietnam needs breakthrough [encouragements] as well as highly competitive policies and investment incentives,” said Mr. Do Nhat Hoang, Director General of the Foreign Investment Agency, in an interview with the Financial Times.
Mr. Hoang informed FT that there are currently “tens of billions of dollars” worth of potential high-tech investment projects being negotiated. However, the implementation of these projects depends on incentive policies, and he added that Vietnam is considering offering special incentives on land lease fees, corporate income tax, and import-export taxes.
“Since 2024, Vietnam has applied a global minimum tax rate of 15% for multinational enterprises. The government is establishing an investment support fund for companies planning high-tech investments. These high-tech projects, which are also large-scale, require very fast administrative procedures,” said Mr. Hoang.
Additionally, according to the Director General, Vietnam also plans to collaborate with universities and multinational companies to enhance its workforce, expedite licensing, and streamline registration processes.
According to FT, an unstable power supply is also a hindering factor. Last year, shortages caused power outages and affected manufacturing plants in northern Vietnam. On this issue, Mr. Hoang assured that the energy shortage in Vietnam has been resolved. In July, Vietnam also allowed some units to purchase electricity directly from solar and wind energy producers, a move beneficial to large manufacturers.
“We can definitely meet the demands that these investors bring,” the leader affirmed.
Vietnam remains a top destination for foreign direct investment. Registered FDI increased by nearly a third in 2023, reaching $36.6 billion, of which $23.2 billion was disbursed. In the next five years, Vietnam aims to attract at least $40 billion annually in registered FDI, with a higher proportion for high-tech investments.
In a recent research report, HSBC recommended that if Vietnam wants to maintain strong investment inflows, it is important for the country to “move up the manufacturing value chain and increase the domestic value-added content of these goods.”
The HSBC analysts wrote: “This requires proactive steps to promote skills enhancement in technical fields and improve existing infrastructure to facilitate and accommodate additional FDI inflows.”
Source: HSBC
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Mobile World achieves revenue of VND118,000 trillion: TVs, tablets, and phones all decrease by 10% – 50%, while one product grows in both quantity and revenue.
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Vietnam is one of the largest exporting countries in the world, along with China and the Philippines.
