Big corporations are being more careful when investing in Vietnam.

Competitive capacity to attract FDI is threatened

Speaking at the workshop "Resonating investment power for a prosperous Vietnam" organized by Dau Tu Newspaper this morning, May 15, in Hanoi , Deputy Minister of Planning and Investment Do Thanh Trung commented that it can be said that Vietnam is one of the leading countries and has achieved many important achievements in attracting foreign direct investment (FDI).

Các tập đoàn lớn đang cẩn trọng hơn khi đầu tư vào Việt Nam - Ảnh 1. — Overview of the workshop

By the end of April, Vietnam had attracted nearly 446 billion USD in FDI capital; of which, about 280 billion USD had been disbursed. In 2020, despite the impacts of the Covid-19 pandemic, according to the United Nations report on trade and development, Vietnam was still one of the 20 countries and economies with the largest FDI capital flows attracted during the year.

However, the leader of the Ministry of Planning and Investment also pointed out that, in the context of new policies and fluctuations that have appeared, in the first 4 months of the year, newly registered FDI projects in Vietnam decreased slightly compared to the same period last year.

The world continues to face many difficulties and challenges; inflation has decreased but remains high; global growth is low. In addition, financial markets, public debt, natural disasters, climate change, etc. pose many risks.

This context has greatly affected global investment flows, including Vietnam; plus many arising issues such as the expected application of a global minimum tax rate of 15% from 2024... so FDI into Vietnam is in a general trend of slowing down.

"Recently, we have seen signs that large corporations are more cautious and thorough in considering continued investment abroad, including in Vietnam," Mr. Trung emphasized.

From the perspective of FDI enterprises, Mr. Choi Joo Ho, General Director of Samsung Vietnam Complex, said that Samsung officially invested in Vietnam in 2008. Up to now, Samsung is operating 6 factories, 1 sales entity, 1 research and development center. The accumulated investment by the end of 2022 is 20 billion USD.

Currently, more than 50% of Samsung phones sold worldwide are "Made in Vietnam" products, manufactured in Vietnam.

However, the global situation and rapid changes in the business environment are threatening the continuation of this success story. "The rules and order of the world economy are changing. The Organization for Economic Cooperation and Development (OECD) has applied a global minimum tax regime to multinational enterprises with a certain turnover; more than 100 global enterprises investing in Vietnam will be affected.

Recently, we have seen signs that large corporations are being more cautious and thorough in considering further investment abroad, including in Vietnam.

Deputy Minister of Planning and Investment Do Thanh Trung

Therefore, Vietnam's competitiveness in attracting FDI is also threatened. The preferential policy of corporate income tax exemption and reduction that the Vietnamese Government is currently implementing will lose its practical effectiveness. In addition, changes in the tax mechanism will cause major disruptions for Vietnam and FDI enterprises," said the General Director of Samsung Vietnam Complex.

Continue to improve the investment environment

Regarding solutions to enhance Vietnam's competitiveness in attracting FDI, Mr. Choi Joo Ho first mentioned the story of improving the investment environment.

Since implementing the renovation policy in 1986, Vietnam has continuously improved its investment environment, leading to the continuous expansion of FDI enterprises. Emphasizing that it cannot stop here, the General Director of Samsung Vietnam Complex said: "Improving the investment environment must be done continuously, especially, it is necessary to monitor changes in the external environment and implement appropriate reforms".

Pointing out that the global minimum tax mechanism is a typical example of the most important recent external environmental changes, Mr. Choi Joo Ho added that many global consulting firms operating in Vietnam such as Deloite, PwC and economic experts are also actively recommending that Vietnam apply the QDMTT mechanism (standard domestic minimum tax mechanism - PV) and cost-based incentive policies to respond to the global minimum tax.

Agreeing with the above viewpoint, Samsung hopes that the Vietnamese Government will continue to create a predictable business environment, in line with global standards and recent changes in the investment environment.

Speaking at the conference, Mr. Furusawa Yasuyuki, General Director of AEON Vietnam, said that since opening the first shopping center in 2014, AEON now has 8 member companies in Vietnam, investing in diverse business fields such as shopping center development, retail, finance, services, import and export.

Emphasizing that AEON identifies Vietnam as the second key market, besides Japan, to accelerate and promote investment activities, Mr. Furusawa Yasuyuki expressed his hope that in the coming time, Vietnam will simplify administrative procedures; at the same time, local authorities need to make decisions more quickly to promote the development of foreign enterprises in Vietnam.

In the first four months of this year, the total newly registered, adjusted, and contributed FDI capital of foreign investors reached nearly 8.89 billion USD, equal to 82.1% compared to the same period last year. The realized capital of FDI projects is estimated at about 5.85 billion USD, down 1.2% compared to the same period in 2022.

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