In 2023, Vietnam witnessed a series of visits by high-ranking leaders from various countries, along with the "largest business delegations ever" to the country. Amidst global challenges in attracting foreign investment, Vietnam emerged as a destination for high-quality foreign capital.
Opportunities to build a semiconductor industry.
During his visit to the United States, on the evening of September 20th, Prime Minister Pham Minh Chinh met with leaders of several leading American and global corporations such as SpaceX, Pacifico Energy, and Coca-Cola. At the meeting, Tim Hughes, Senior Vice President for Global Government and Business Relations, along with senior leaders of SpaceX, stated that the corporation plans to expand its investment and wishes to provide Starlink (satellite internet) services in Vietnam.
Meanwhile, Pacifico Energy Group expressed its desire to invest in offshore wind power in Vietnam, while Coca-Cola stated that in the near future, the group will produce in a green, environmentally friendly manner. Earlier, in Washington D.C., the Prime Minister witnessed the signing of a memorandum of understanding between the National Innovation Center (Ministry of Science and Technology) and Cadence Design Systems Group to develop products; a signing with the University of Arizona to develop human resources for the semiconductor chip industry; a signing between the Ministry of Education and Training and Intel Corporation on developing human resources for the high-tech industry; and a memorandum of understanding between the Information and Communication Technology Industry Department and the giant chip corporation Synopsys to support the development of the semiconductor microchip industry.
Prime Minister Pham Minh Chinh arrived in the US on September 17th, immediately following US President Joe Biden's visit to Vietnam (September 10-11). The joint statement on upgrading Vietnam-US relations to a Comprehensive Strategic Partnership also acknowledged Vietnam's enormous potential to become a key nation in the semiconductor industry. Both countries support the rapid development of Vietnam's semiconductor ecosystem and are actively cooperating to enhance Vietnam's position in the global semiconductor supply chain.
This included a statement on launching human resource development initiatives in the semiconductor sector. The US will provide an initial seed funding of $2 million, along with future support from the Vietnamese government and the private sector. The high-level US delegation that recently visited Vietnam also included leaders from major technology corporations in the semiconductor supply chain such as Amkor Technology, Synopsys, and Marvell, all of whom announced their intention to collaborate on technological innovation and invest in manufacturing in Vietnam.
In fact, two of the world's three leading semiconductor technology suppliers already have factories in Vietnam. Intel established a factory in Vietnam more than 10 years ago, with investments totaling nearly $1.5 billion to date. Samsung is also preparing to test the production of semiconductor chip grids and will mass-produce them at its Samsung Thai Nguyen factory in the near future…
Also in September, Hana Micron Vina (South Korea) inaugurated a semiconductor manufacturing plant project in Bac Giang with an investment of $600 million, marking the first semiconductor manufacturing project in Northern Vietnam. The group plans to increase investment to $1 billion by 2025, aiming to develop a new semiconductor industry ecosystem in Vietnam.
Next is the $1.6 billion semiconductor project being implemented by Amkor Technology Vietnam at Amkor's largest and most modern factory globally in Bac Ninh; Infineon Technologies AG - Germany's largest semiconductor chip manufacturer - also announced the establishment of a semiconductor chip development center in Hanoi…
Manufacturing of civil aircraft wing flaps for Boeing at MHI Aerospace Vietnam Co., Ltd., Thang Long Industrial Park, Hanoi.
Pham Hung
Energy expert Khương Quang Đồng (France) commented that Vietnam's abundant rare earth resources have attracted countries that are mastering semiconductor technology. To escape dependence on a few partners, countries like the US, Japan, and South Korea have turned to countries with abundant rare earth resources like Vietnam.
"Vietnam possesses valuable rare earth resources, but lacks environmentally friendly mining technology and advanced processing technology. With its strategic materials manufacturing industry and strong economic growth, Vietnam will be an attractive investment destination for future industries ranging from lithium batteries, electric cars, smartphones, to computers… This is the final stage we need to overcome to build a high-tech mass industry," emphasized Dr. Khuong Quang Dong.
The first bricks have been laid by the "eagle," building its nest.
Looking back, Vietnam's foreign investment attraction in 2023 had an unprecedented characteristic: the arrival of business delegations from major global corporations seeking business opportunities. This included a delegation of over 50 US companies operating in defense technology, pharmaceuticals, technology, semiconductors, finance, energy, and entertainment, with big names like Boeing, SpaceX, Netflix, Pfizer, Abbott, Citibank, Meta, and Amazon. Reuters confirmed this was the largest US business delegation ever, demonstrating the growing interest of American businesses in Vietnam.
Earlier in June, the delegation of over 200 companies accompanying South Korean President Yoon Suk Yeol to Vietnam included the chairmen of major corporations such as Samsung Electronics, SK, Hyundai Motor, LG, Lotte, Hanwha, Hanjin, Hyosung, etc. On this occasion, South Korea and Vietnam signed a memorandum of understanding to establish a supply chain center for rare earth minerals and other important minerals to ensure a stable supply for South Korean companies and encourage them to invest in Hyosung.
Following that, the official visit of Singaporean Prime Minister Lee Hsien Loong in August and most recently the historic trip of US President Joe Biden in September have opened up many opportunities to attract high-quality capital. To date, several "eagles" have decided to lay the first bricks to build their nests in Vietnam. Apple has opened an online store for the Vietnamese market, offering a full range of products and direct Vietnamese language support to customers nationwide.
Reuters commented that this move "paved the way" for Apple to open direct retail stores, stating that Tim Cook (Apple's CEO) had "bet" on this emerging market, where the number of iPhones is not yet saturated. Boeing also opened a representative office in Hanoi and announced it would invest in developing a supply chain for aviation parts and equipment in Vietnam. Following a trip with over 200 businesses accompanying the South Korean President, LG adjusted its investment upwards by an additional $1 billion, bringing the total investment to over $2.05 billion, and announced it would invest an additional $5 billion in Vietnam; SK announced it is considering a large investment in Vietnam through a clean hydrogen gas production project...
Vietnam has a great opportunity to develop its semiconductor industry.
Ngoc Duong
Expectations for high-quality capital from the US, South Korea, Singapore, Europe, etc., in 2023 are very high. Associate Professor Dr. Nguyen Thuong Lang, from the Institute of International Trade and Economics, commented that what we expect from the visits of large global businesses to Vietnam in recent times has shown very positive signs. These are the decisions of these "eagles" to lay the first foundation stones in Vietnam. Moreover, the number of manufacturing businesses in the supply chains of these major corporations is also expanding their investments significantly.
He said: "According to the recent WIPO report – the global innovation index – the number of FDI enterprises owning high technology in Vietnam has increased significantly. Amid concerns about a global economic downturn affecting FDI attraction, the continuous presence of global 'eagles' in the Vietnamese market has had a significant impact on Vietnam's image in the eyes of foreign investors. These large 'eagles' will attract other 'eagles' in the value chain. The increasing presence of names like Boeing fuels the dream of a manufacturing center for aircraft components, even a center for manufacturing components for aircraft, spacecraft, and high-tech shipbuilding… Vietnam once had that dream and hopes to reactivate it soon. Furthermore, Vietnam's net emission reduction policy has been and continues to attract investors from developed countries. In addition, FDI disbursement is at its highest level in the last five years." This also shows that foreign investors have taken proactive steps to anticipate the global economic recovery after Covid-19 by accelerating investment expansion, opening offices, and exploring markets… As a result, FDI flows into Vietnam will recover sooner than the rest of the world."
The investment and business environment aligns with international practices.
In discussions with Thanh Nien newspaper , most experts shared the common view that a stable socio-political environment, stable macroeconomic conditions, efforts to reform institutions, and a focus on sustainable green development and net emission reduction are major advantages for Vietnam in attracting FDI in the current context. In particular, the World Bank, in a report at the end of 2022, stated that FDI into Vietnam increased by 108 ranks since the Doi Moi (Renovation) period in 1986. Specifically, from $3 million, ranking 136th out of 160 countries globally, to $19 billion in 2022, ranking 28th globally and 3rd out of 10 in ASEAN.
Clean energy is attracting many foreign investors.
Nguyen Nga
Professor Nguyen Mai, Chairman of the Vietnam Association of Foreign Investment Enterprises (VAFIE), assessed that many favorable factors have developed rapidly in recent times. This presents an opportunity for Vietnam to quickly seize and accelerate the attraction of foreign capital. While countries around the world are competing in semiconductors, Vietnam is being highly praised by international media for its rare earth resources. This is an extremely valuable mineral resource, even more valuable than oil – an export source that generates 20% of the annual national budget revenue.
"If we produce 220,000 tons of rare earth elements, imagine we could earn tens of billions of USD. That's not just money, but also prestige in the world. The world today operates very simply; if you have something to exchange with me, you have a competitive advantage. But if you depend entirely on me, you will never be a competitor," Professor Nguyen Mai said, further emphasizing that the US is a leading country in high technology, future technology, and core technology. Therefore, technological cooperation between the US and Vietnam is extremely important. Vietnam can completely rely on high technology to modernize and industrialize the country.
Many international organizations and foreign economic experts highly appreciate the Vietnamese government's determination to create an investment and business environment that aligns with international practices. A report by the Organization for Economic Cooperation and Development (OECD) on FDI in Southeast Asia also noted that Vietnam has made considerable efforts in facilitating FDI development, more so than any other country in the region, and is one of the ASEAN markets with the fewest policy barriers to FDI. However, Vietnam still needs to closely monitor policy changes in other countries, their foreign policy strategies, and especially the strategies of multinational corporations that have invested or will invest in the domestic market.
Sharing the same view, economist Dr. Vo Tri Thanh - Director of the Institute for Strategic Brand and Competition Research - commented that the foreign business delegations visiting Vietnam this year included many high-quality investors. FDI has always been an important capital channel for the economy. Every move Vietnam makes in reforming and expanding the investment environment, and reforming institutions in the new situation, is closely watched by investors. In the context of a slowing global economy, Vietnam needs to take advantage of these important meetings and exchanges to attract high-quality capital.
Thanhnien.vn
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