On the occasion of the New Year of the Dragon 2024, PLVN interviewed Minister of Planning and Investment (MPI) Nguyen Chi Dung.
Dear Minister, what do you think about the challenges in attracting foreign investment that Vietnam may face in 2024?
- In 2024, besides the advantages, Vietnam's FDI attraction still faces many difficulties and challenges. First of all, geopolitical conflicts in the world continue to be complicated and unpredictable. On the other hand, global inflation is still forecast to be high at 5.8%, even higher than in 2023 (5.2%).
At the same time, investors are looking for investment opportunities in neighboring countries to shorten the supply chain. Many countries such as South Korea and Japan - among the largest sources of FDI for Vietnam, the US and some countries in the EU, are trying to limit foreign investment (FDI) by reducing corporate income tax (CIT) and increasing domestic investment incentives to recover FDI capital. The currencies of South Korea and Japan have depreciated by 20-25%, affecting FDI of these two largest partners.
On the other hand, many multinational corporations are restructuring their production chains and limiting new investment activities due to the declining global growth prospects, while investment costs continue to increase; competition in attracting investment is increasingly fierce, some countries from the region such as Thailand, Indonesia and Malaysia with better resources, tax reduction or more support for foreign investors, requiring Vietnam to constantly improve its institutions, improve the investment environment, and affirm its position on the foreign investment map.
In addition, the move by countries to apply the TTTC tax rules will eliminate the role of traditional incentives (such as tax and land incentives...) in competing to attract foreign investment.
Vietnam's investment and business environment itself still has some difficulties for businesses. In particular, "post-investment" administrative procedures (such as: land; construction; fire prevention and fighting, etc.) still have many shortcomings, affecting the process of facilitating the investment environment; industries that need to be prioritized to attract and create breakthrough development in Vietnam such as: high technology (CNC), innovation (I&C), energy, etc. do not have a corresponding mechanism to attract investment. Although a number of investment incentive policies have been issued, the results have not met expectations.
In addition, the shortage of labor and raw materials in some industries and localities has not been thoroughly resolved, leading to the risk of disruption and breakage of local supply chains in the short term...
So, Minister, what solutions do we need to increase FDI attraction, especially in the context of implementing TTTC tax from January 1, 2024?
- First of all, it is necessary to continue reviewing and adjusting FDI policies in line with global investment trends, with special attention paid to industries and fields that can contribute to the greening of the economy , energy conversion, green growth, and digital transformation, such as: Renewable energy, waste treatment; green urban development; clean agriculture; research and development (R&D); information technology; innovation...
Second, continue to reform administrative procedures, especially the implementation of procedures after granting Investment Registration Certificates such as: Land; construction; fire prevention and fighting; environment; customs, etc.
Third, research and develop breakthrough mechanisms related to financial, securities and monetary policies; focus on building and completing the Financial Center project in Ho Chi Minh City and Da Nang to create breakthrough momentum and socio-economic development.
Fourth, promote the linkage of human resource training according to the needs of enterprises as well as anticipate trends to train human resources to meet the needs of attracting investment in the field of CNC and advanced technology in the coming time.
Fifth, provide synchronous support for promoting foreign investment attraction in a number of potential fields, creating breakthroughs (such as CNC, semiconductors, innovation...); create maximum conditions and encourage enterprises to carry out R&D activities or cooperate in technology transfer in Vietnam.
Sixth, promptly issue appropriate policies to effectively and flexibly adapt to the impact of the TTTC tax, ensure investor confidence, and maintain the attractiveness of the investment environment.
Seventh, prepare necessary conditions for infrastructure, clean land, energy, and human resources to attract large investment projects that are truly meaningful for socio-economic development. Speed up the implementation of public investment projects, especially projects in the field of transport infrastructure, to meet investors' requirements.
Finally, choose breakthrough fields such as: CNC, STI, digital transformation, green transformation, financial centers, semiconductor chip manufacturing, hydrogen, renewable energy, etc. From there, position potential multinational corporations with technology and financial resources in the above fields through channels that influence investment decision makers to proactively approach, exchange and invite investment in Vietnam...
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Prime Minister Pham Minh Chinh visits the Vietnam International Innovation Exhibition 2023 at NIC Hoa Lac. (Photo source: thainguyentv.vn) |
Last year, the Ministry of Planning and Investment pioneered working with the world's leading enterprises in the field of innovation, calling for investment and cooperation with Vietnam. Could the Minister share the results achieved and plans for the coming years?
- Recently, many large technology companies in the world have cooperated with the National Innovation Center (NIC) to implement many innovation programs and activities, support businesses in digital transformation and train and develop digital human resources such as: Google, Meta, Siemens, Hitachi,...
In 2023, through contact and exchange activities at all levels, the Ministry of Planning and Investment has proactively proposed cooperation and called for investment in the field of innovation with leading enterprises in the world. Through that, many large international enterprises such as John Cockerill, Synopsys, Cadence,... have signed cooperation agreements with NIC.
At the Vietnam International Innovation Exhibition 2023 combined with the inauguration ceremony of the NIC's operating facility in Hoa Lac, the innovation facilities and semiconductor chip design incubation centers of large technology enterprises such as Samsung and Synopsys were opened at NIC Hoa Lac. Along with that, the Exhibition has gathered hundreds of large technology enterprises and corporations to participate, especially international corporations such as SK, Samsung, Google, Meta, SpaceX, John Cockerill, Synopsys, Cadence, VISA,... showing that Vietnam is becoming more and more attractive to technology corporations in the world.
In particular, after the important and historic achievements in foreign affairs, high-level diplomacy, and economic diplomacy, many large enterprises in the world have increased exchanges and cooperation in development in many economic fields, especially in new industries such as chips, semiconductors, high-quality human resource training, etc. In the last months of 2023, there were leading enterprises in the world in the semiconductor field such as Nvidia, member enterprises of the US Semiconductor Industry Association (Intel, Qualcomm, Ampere, ARM, Synopsys, Infineon) came to work with the Ministry of Planning and Investment, as well as seek investment and business opportunities, expand the market of operations in Vietnam through cooperation with NIC and Vietnamese enterprises.
Based on the achieved cooperation results, the Ministry of Planning and Investment is directing NIC to focus on implementing the cooperation contents agreed with current partners, and proactively seek and promote cooperation with the world's leading partners in 8 key areas to establish operations at NIC's operating facilities, especially the facility in Hoa Lac. Thereby contributing to promoting strong growth based more on new driving forces (such as: digital economy, science and technology, innovation, etc.); new industries and fields (such as: chips, semiconductors; renewable energy; hydrogen, etc.).
Thank you very much, Minister!
“Opportunities to attract FDI in 2024 are opening up like in 2008, when Vietnam joined the WTO. Factors such as the “war” to control core technology, chip technology, and future technology are opening up opportunities for Vietnam to attract CNC FDI. Although the imposition of TTTC tax from January 1, 2024 will eliminate Vietnam’s tax incentives in attracting FDI, it will also bring benefits to Vietnam, helping to solve the transfer pricing issue in FDI investment activities.
To cope with the TTTC tax, Vietnam needs to change the investment environment to retain FDI "giants"; at the same time, attract new investors in 2024. To do so, investment policies need to be more open, intellectual property protection issues need to be improved and the quality of Vietnamese human resources needs to be improved soon...".
(Mr. Nguyen Van Toan - Vice President of the Association of Foreign Investment Enterprises - Vafie)
“In addition to considering additional incentives, including financial incentives, to attract and retain investors, Vietnam needs to continue investing in upgrading national socio-economic infrastructure; supporting human resource training, especially high-quality human resources in the field of CNC and green economy; and supporting and facilitating administrative procedures.
Regarding the application of the TTTC tax, the first benefit of applying the TTTC tax is to ensure the rights and legitimate interests of Vietnam. At the same time, Vietnam will also collect an additional tax from the TTTC tax. On the other hand, the application of the TTTC tax will ensure fairness and equality between domestic enterprises and FDI enterprises. At the same time, it demonstrates progress and transparency in the tax management system, the investment and business environment is closer to the general trend of the world, while still maintaining preferential policies for enterprises not subject to the TTTC tax.
In order to retain CNC investors, Vietnam needs to continue to invest more in transport infrastructure to help reduce logistics costs and production and business costs for enterprises, in addition to investing in improving the national social infrastructure system; supporting human resource training, especially high-quality human resources, to meet the human resource needs of FDI enterprises, especially in the field of CNC and green economy...
(Associate Professor, Dr. Tran Hoang Ngan - Economic expert)
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