VIETNAM is among the few Asean member countries to consistently improve its attractiveness to foreign investors due to its growing economy and improving business climate, according to experts.
Vietnam’s ability to attract FDI is due to its consistent economic reform, a young and increasingly urbanised population, affordable labour, constant improvements to its business climate, and political stability, said Berly D Alvarez, chairman of the Philippines’ Kaunlad Lending Investors Corporation
The fact that it hosted the 2017 APEC meetings highlights its regional economic integration and steadily improving business climate, Alvarez told the 2018 Horasis Asia Meeting held recently in Binh Duong Province.
Vietnam has been attracting investment in infrastructure, including power projects, road and rail construction and renewable energy.
Don Lam, CEO of VinaCapital, said the country’s economy remains strong with 6.6 per cent growth targeted next year, inflation remaining under control and manufacturing expanding.
“More foreign investment is expected to flow into Vietnam in the coming time,” he said.
Pakpoom Vallisuta, chairman of The Quant Group Corporation, a leading Thai investment banking advisor, told Viet Nam News that the country is expected to achieve 6.8 per cent GDP growth in 2019. Market reforms also help attract investment, he said.
Pham Hong Hai, CEO of HSBC Vietnam, said, “We also see potential trade diversion as US import demand shifts away from China to other Asean markets like Vietnam.”
While this trend is a good sign for the development of the country, it also puts more pressure on the country and businesses to develop infrastructure, he said.
“So improving labour productivity through better education and vocational training, I think, should thus be a priority for the government.”
While it is true that a large portion of the workforce can transition from agriculture, most might move only to low-end manufacturing, he said, and there remains a dearth of qualified workers to advance to higher positions.
The government has made efforts like improving the quality of primary and secondary education, but more needs to be done, he said.
Improving tertiary education and vocational training, boosting private-sector-led in-house training, and providing lifelong learning opportunities are some of the reforms needed if the country wants to take full advantage of its current demographic “sweet spot” and the possible trade diversion, the meeting heard.
Experts recommended that Vietnamese businesses take advantage of Industry 4.0, investing more in technology to enhance their competitiveness.
In addition, policy reforms to attract even more foreign investment are important for future growth and for raising the country’s competitiveness, especially in sectors like infrastructure and manufacturing, they said.
Vietnam’s business climate still faces numerous challenges, including an underdeveloped legal framework, relatively high risk of corruption, poor protection of intellectual property rights and limited availability of skilled and productive workers, according to Alvarez.
The country’s judicial system and infrastructure need improvement as do higher education and vocational training, he added.