Maintaining attractiveness to foreign investors

The US announcement of retaliatory tariffs on several countries has had a significant impact on the global economy and investment. Experts predict that international investment will become unpredictable, with a broad-based downward trend.

However, this is a new and complex issue, and there is insufficient concrete evidence to suggest that foreign direct investment (FDI) attraction will decline in Vietnam...

Automobile assembly at the Ford Vietnam factory (a joint venture between Ford Motor Company of the United States and Song Cong Diesel Company). Photo: Duc Thanh

New developments, old advantages

From a purely theoretical standpoint, once goods are subject to high tariffs, they become less competitive, disadvantaging producers. International investors may then have to consider reducing investment, withdrawing capital, or even ceasing investment in areas subject to high tariffs. This creates a sudden and unfavorable situation for a country like Vietnam, which regularly exports large quantities to the US market.

Conversely, some argue that the "common denominator" of declining FDI investment may not necessarily be significant, and there is no clear basis to conclude that this capital flow into Vietnam will decrease significantly. Firstly, Vietnam has diversified its export markets, establishing a foothold in several important, high-purchasing markets. Furthermore, the effective utilization of 17 free trade agreements (FTAs) such as EVFTA, CPTPP, RCEP, etc., has helped Vietnamese businesses benefit from tariffs and promising market expansion potential – advantages for investors.

Furthermore, the government continues to implement flexible fiscal and monetary policies, promoting public investment and improving the business environment, creating momentum for economic growth. Once a favorable business environment and growth rate are maintained, Vietnam will always be an attractive market for investors to consider.

In fact, in the first quarter of 2025, the whole country attracted US$10.98 billion in FDI capital, an increase of 34.7% compared to the same period in 2024, showing that the trend of foreign investors showing interest in and increasing investment in Vietnam continues to grow. According to Ms. Phi Thi Huong Nga, Head of the Industrial and Construction Statistics Department (General Statistics Office, Ministry of Finance ), Vietnam's attractiveness and ability to attract FDI capital are maintained thanks to its significant potential and advantages. "As a large market with over 100 million consumers, a stable macroeconomic situation, and competitive costs, our country also has a favorable geographical location, easily connecting with many other large markets," Ms. Phi Thi Huong Nga said.

Integrated solutions

However, the US imposition of retaliatory tariffs needs careful analysis to find solutions and responses. Experts suggest that Vietnam should focus on implementing several solutions to proactively improve the situation and minimize risks in bilateral investment and trade relations with the US. These include strengthening bilateral dialogue to clarify the factors and trade interests between the two countries; affirming Vietnam as a fair and reliable trading partner; continuing to proactively and transparently provide information on the origin of goods; and actively using various channels and measures to reasonably increase imports of US goods, gradually creating a balanced trade balance between the two countries.

Next, Vietnamese authorities need to actively study options, proactively negotiate, and reconcile common interests with the United States to reach an agreement on tariff rates at a reasonable and most advantageous level.

Improving and enhancing the quality of the investment environment remains a fundamental and practical solution that needs to be persistently implemented in a substantive and effective manner to maintain and promote FDI activities. Particularly recently, the Prime Minister issued Directive No. 22/CĐ-TTg on a number of key tasks and solutions regarding administrative procedure reduction, improving the business environment, and promoting socio-economic development. This directive requires ministries and localities to focus on thoroughly reviewing, reducing, and simplifying administrative procedures related to investment, production, business, and people's lives, ensuring a reduction of at least 30% in processing time; at least 30% in business costs; the abolition of 30% of unnecessary business conditions; and the implementation of business-related procedures electronically, ensuring smooth, seamless, and efficient operation.

Furthermore, it is necessary to boldly apply special investment procedures, likened to a "green lane," shifting strongly from pre-approval to post-approval to shorten the time required for investment procedures and create the most favorable conditions to enhance investment attractiveness in the high-tech sector. This is a solution to improve competitiveness and attract strategic investors to participate in projects in the semiconductor and chip materials industry; component and integrated circuit manufacturing; research and development centers, and innovation centers...

Simultaneously, the upgrading and expansion of numerous infrastructure projects, especially roads, seaports, airports, and industrial parks, in a synchronized and modern manner, are proving effective. The preparation to readily meet the project implementation needs of investors, with a focus on improving logistics capacity, is a positive factor, creating strong support for investors.

Notably, Vietnam has focused on seizing opportunities to attract FDI from the wave of international investment relocation, combined with its orientation towards encouraging and positioning itself as a high-tech destination over the past period. This can be said to be a trend that has been formed by the successful reception of many major names such as Samsung, Amkor, Foxconn, etc. It is no coincidence that international investors recognize Vietnam as becoming an increasingly important link in the global supply chain.

Source: https://hanoimoi.vn/duy-tri-suc-hap-dan-voi-cac-nha-dau-tu-nuoc-ngoai-701137.html