Vietnam Fights For Foreign Investors
Foreign direct investment in Vietnam continues to increase, rising from US$11.57 billion in July to US$12.8 billion in August 2022, signalling the country’s recovery from COVID-19. The growth is partly due to Hanoi’s consistent efforts to provide a safe and welcoming environment for foreign business through Special Economic Zones (SEZs) — ensuring companies have access to a local workforce in favourable conditions.
There is a new impetus to invest in Vietnam due to the disruption in supply chains from China’s zero-COVID-19 policy, the threat of Chinese aggression towards Taiwan and Beijing’s strengthening ties with Russia. Taiwan’s electronic manufacturing giant Foxconn plans to increase its in-country presence, with first-ever plans to manufacture Apple Watches and MacBooks in Vietnam. Yet South Korea remains the country’s largest investor and Samsung Electronics remains its most important corporate partner.
Companies are expected to show interest in Vietnam now that the government is preparing ‘eagles’ nests’ — SEZs in which doing business is easier for foreign firms. That will help address Vietnam’s over-reliance on China for imports and the United States for exports. Diversification will improve Vietnam’s significant trade imbalance with Washington after it posted a US$69.7 billion trade surplus in goods with the United States in 2020 — a figure that exceeds that of its neighbours.
Firms arriving in Vietnam can expect to find diligent, low-cost labour and an increasingly high standard of living for their international managers, especially in Hanoi and Ho Chi Minh City. Vietnam still faces challenges in finding skilled workers in a country where parents want their children to attend university rather than vocational school. There is also a lack of good-quality small and medium-sized enterprises to join Vietnam’s supply chains, infrastructure outside the major cities is often of poor quality and air pollution kills thousands every year.
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