Vietnam Pledges Stable, Cooperative and Conducive Environment to FDI Firms

“The Government of Vietnam always engages in open dialogues and shares insights with partners and investors to foster a peaceful, stable, cooperative, and progressive environment where we can work together, thrive together, succeed together and grow together.”

Prime Minister Pham Minh Chinh addresses the meeting with the FDI enterprises and the Vietnam Business Forum, Hanoi, March 19, 2024

This statement was made by Prime Minister Pham Minh Chinh during his engagement with foreign direct investment (FDI) enterprises at the Annual Vietnam Business Forum 2024 (VBF 2024). The forum, themed ‘FDI Enterprises Pioneer in Implementing Green Growth Strategies’, was co-chaired by the Ministry of Planning and Investment, the World Bank (WB), and the International Finance Corporation (IFC).

Positive development prospects

Prime Minister Pham Minh Chinh said that despite the challenging circumstances, the collective efforts of the political system, business community, and the populace, under the guidance of the Party, have enabled Vietnam’s socioeconomic landscape to maintain a positive trajectory of recovery. This has resulted in significant achievements across various facets, making Vietnam a bright spot in the global economy.

Many reputable international organizations have expressed high regard for the performance and future prospects of the Vietnamese economy. The Asian Development Bank (ADB) projects Vietnam’s economic growth in 2024 to be 6%, HSBC estimates it at 6.3%, Standard Chartered Bank predicts a growth rate of 6.7%, and S&P forecasts a growth of 6.8%.

In particular, although the global FDI flows have trended declining, Vietnam remains a strong magnet to FDI flows. In 2023, the FDI value was nearly US$36.6 billion, representing a year-on-year growth of 32.1%, and the realized FDI fund was nearly US$23.2 billion, up 3.5%. In the first two months of 2024, the licensed FDI value and the disbursed FDI value were US$4.3 billion and US$2.8 billion, up 38.6% and 9.8% year on year, respectively. As of the end of February 2024, Vietnam had over 39,500 valid FDI projects with a combined value of over US$473 billion, invested by companies from 145 countries and territories around the world. Besides, Vietnam also promoted overseas investment effectively.

The business and investment climate in Vietnam has seen consistent enhancements. As per the Economist Intelligence Unit (EIU), the ease of doing business index witnessed a significant leap of 12 places in 2023. Furthermore, the World Intellectual Property Organization (WIPO) reported that the global innovation index ascended two places from the previous year, securing the 46th position among 132 ranked members in 2023. In terms of national brand value, Vietnam achieved a remarkable milestone with a value of US$431 billion, placing it 32nd among the world’s 100 most strong national brands.

Prime Minister Pham Minh Chinh emphasized that the FDI sector has importantly helped improve the quality of Vietnam's economy.

Accordingly, the FDI sector is a key driving force for fostering innovations and enhancing the quality of laws, mechanisms, policies and national governance capabilities. FDI is an important resource, both adding the fund for the economy and promoting economic restructuring, employment and livelihoods for people and creating high-quality products. The advent of more large-scale multinational corporations with modern technologies contributes to upgrading technologies and management skills and elevating Vietnam's position in the global supply chain.

Nevertheless, Prime Minister Chinh acknowledged certain limitations within the FDI sector. These include suboptimal investment quality, inadequate technology levels and technology transfer in certain projects, and a low localization ratio. He also noted the lack of a robust, effective, and sustainable integration between the domestic business sector and the FDI sector. A limited number of FDI projects have invested in high-tech, green, clean and environmentally friendly technologies. Certain regions have been unable to meet the demands of large-scale, high-tech FDI projects for high-quality human resources. Additionally, unresolved issues have surfaced in labor relations.

Mr. Pham Tan Cong, VCCI President and VBF Co-Chair, delivers a speech to the meeting

Actively adapting FDI attraction mechanisms and policies

Thus, Prime Minister Chinh emphasized that Vietnam must remain vigilant of both international and domestic developments to proactively fine-tune mechanisms and policies. This is crucial to attract FDI flows and ensure the flexibility, timeliness, effectiveness, and suitability of these mechanisms and policies in alignment with Vietnam’s circumstances and global trends. He stressed the importance of concentrating on the construction, regular review, amendment, supplementation, and refinement of the business investment environment. This is to ensure its attractiveness, openness, transparency and competitiveness on both regional and international scales.

Furthermore, Vietnam must adopt a selective approach in attracting investment projects, with a focus on high-tech initiatives that have substantial ripple effects and prioritize environmental sustainability. It is important to foster incentives that expedite the digital transformation, green transition, development of a circular economy, and the growth of emerging industries such as semiconductor chips, artificial intelligence and hydrogen energy. Additionally, Vietnam must strive to integrate more deeply into regional and global production and supply chains.

In 2024, Vietnam will prioritize economic growth while maintaining macroeconomic stability, controlling inflation, and ensuring the equilibrium of major economic indicators. The focus will be on safeguarding social security and enhancing the quality of life for its citizens. The country will strive to uphold political and social stability, fortify national defense and security, and actively promote foreign affairs and international integration. Vietnam is committed to preserving a peaceful and stable environment conducive to national development, he added.

Prime Minister Pham Minh Chinh expected FDI enterprises’ continued collaboration and support for Vietnam in the forthcoming period. The five key areas he highlighted were capital investment, institutional development, technological advancement, governance enhancement, and human resource training.

Prime Minister Pham Minh Chinh urged FDI enterprises and foreign investors to align with Vietnam in the pursuit of green transformation and sustainable development. He emphasized the spirit of ‘three pioneers’: Pioneering in awareness, thought, and action, fostering innovative thinking and actions towards green growth; pioneering in technology transfer, promoting research, development, and innovation for green growth; and pioneering in the execution of specific green growth projects, rejuvenating traditional growth drivers and introducing new ones.

Additionally, Prime Minister Pham Minh Chinh expressed his aspiration for international organizations and development partners to persist in their support and collaboration with Vietnam, embodying the spirit of ‘Three Enhancements’. He emphasized the need to intensify cooperation, share experiences, and consult on policies for Vietnam, particularly in priority sectors such as green transformation and digital development. He also called for an increase in financial and technical support for Vietnam, focusing on influential, pioneering and disruptive projects, and facilitating connections with appropriate partners. He underscored the importance of fostering cooperation in the training and development of human resources for Vietnam.

Prime Minister Chinh asserted that Vietnam is committed to upholding “three guarantees”, fostering “three breakthroughs”, and implementing “three enhancements”. The “three guarantees” encompass: Ensuring the legal and legitimate rights and interests of businesses, particularly FDI firms; guaranteeing the stability and development of FDI enterprises in alignment with green growth and significant epochal economic trends such as climate change response; safeguarding independence, sovereignty, unity, territorial integrity, political stability, social order and safety, and policy stability to instill confidence in investors; and ensuring energy security in the pursuit of green transformation, the cultivation of a green transformation ecosystem, and the advancement of the digital economy and digital transformation.

Simultaneously, Vietnam is accelerating three strategic breakthroughs: A breakthrough in institutional frameworks to facilitate green and digital transformation; a breakthrough in various sectors including the economy, society, health, transportation, education and infrastructure, specifically focusing on the infrastructure required for green and digital transformation; and a breakthrough in human resource development.

Vietnam implements “three enhancements”: Enhancement in the trust between businesses and the Government and authorities at all levels; Enhancement in openness, transparency, equality and corruption resistance; and Enhancement in support for businesses towards rapid and sustainable development, with focus on green transformation, digital transformation and public-private partnership.

“Cooperation has been achieved or yet to be achieved but the most important thing is to share and understand together to have all problems, big or small, resolved,” Prime Minister Pham Minh Chinh said, requesting the business community and investors to “do what they say, do what they pledge. All results must be substantive and measurable.”

By Anh Mai, Vietnam Business Forum