"To boost effectiveness in attracting FDI from Taiwan, it’s essential for Vietnam to build trust, provide investment and business security for investors by improving the legal framework, infrastructure and transport costs,” said Mr Chen Borshow, Chairman of the Taipei Office of Economic and Culture in Ho Chi Minh City, in an interview with Vietnam Business Forum. My Chau reports.
For a long time, Taiwan had been the leading investor in Vietnam; however, investment from Taiwan has recently been on a decrease. What can you tell us about this development?
As members of the WTO and APEC, Vietnam and Taiwan over the years have developed their cooperation more tightly and in-depth. According to the economic policy of Taiwan to ASEAN, Vietnam is considered a partner of top priority; in return, the Vietnamese government also highly appreciates the FDI flow from Taiwan.
Since the open door policy and the administrative reform, investment capital from foreign countries and territories to Vietnam has been on a rise, Taiwan’s included. As of September 2013, Taiwanese investors had 2,262 projects in Vietnam with a total registered capital of US$27.5 billion, ranking 3rd in the list of countries and territories investing in Vietnam. Investment areas mostly are traditional industries requiring intensive labour such as textiles, footwear, and household furniture (accounting for about 78 percent). Taiwanese projects in Vietnam have helped create about 1.2 million jobs, a great contribution for Vietnam’s economic development.
For a long time, Taiwan had been the leading investor in Vietnam; however, investment from Taiwan recently has been decreasing, dropping to the 3rd position of all the countries and territories investing in Vietnam. One of the main reasons is the global economic recession undercutting the Taiwanese investment wave. On the other hand, even though Vietnam’s investment environment has recently made positive improvements, there are still many limitations presenting obstacles to investment attraction. Of which, the ambiguity of legislation, policies, tax regulations and environmental protection are among the most challenging for investors. In addition to that are weak technical infrastructure, high logistics costs and high unrecorded costs. We strongly hope that the Vietnamese government would speed up building and renovating infrastructure, stabilising macroeconomic policies and especially developing more transparent tax policies for investment stabilisation.
Taiwanese investment in Vietnam focuses mainly on traditional industries; however, this sector, mostly labour-intensive, is predicted to soon face challenges as Vietnam has recently made some adjustment to its labour law. Using labour heavily will likely lead to disputes between workers and employers. How do Taiwanese investors deal with this issue?
In recent years, the number of strikes in Vietnam has been increasing rapidly, especially after the introduction of the Vietnam Labour Code in 1994. During the period of 2006 - 2012, there were more than 3,600 strikes, over 500/year on average, most of which took place in FDI enterprises from Korea, Taiwan and Japan.
To deal with this problem, we Taiwanese investors want to build a dialogue mechanism within the enterprise to help solve problems quickly and promptly right after it arises, preventing all possible strikes. Additionally, to minimise the number of labour disputes or strikes, we have had the Vietnam Labour Code translated to Chinese for Taiwanese investors’ reference, at the same time encouraging Taiwanese enterprises to dutifully follow the law in terms of labour rights and adjusting salaries based on market pricing.
It can be seen that investment in industries of high brainpower and using advanced technology is now a growing trend, threatening to overwhelm the traditional labour-intensive industries. Are Taiwanese enterprises in Vietnam considering moving into high-tech industries?
There are some Taiwanese high-tech enterprises already working in Vietnam, such as Hong Hai Foxconn, Wintek, Microtek, etc. Also some traditional industrial investment projects are considering importing modern equipment to improve production and reduce labour costs. Recently Taiwan’s Technology Development Alliance has come to visit Taiwanese factories in Vietnam and expressed their desire to strengthen cooperation with Vietnam in the field of high-tech.
In my opinion, to attract high-tech businesses, it is important that Vietnam should focus on building a pool of highly qualified labour through education and training, at the same time developing supporting industries. Right now, the exchanges between Vietnam and Taiwan is close, and the large number of Vietnamese students studying in Taiwan will be a valuable workforce for Taiwanese company in Vietnam when they finish studying and return to the country.
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