Vietnam needs to optimize its competitive advantages to attract FDI from the UK

Experts stressed that Vietnam needs to reshape its competitive advantages in the new period to be ready to receive foreign direct investment (FDI) flows from the UK.

Ho Chi Minh City is leading in attracting FDI from the UK. Illustration photo: Giang Son Dong

Despite the advantages of low labor costs and abundant human resources, Vietnam should rely on new factors, including an attractive and transparent investment environment, simplified and digitalized administrative procedures, as well as infrastructure development to attract high-quality foreign investment.

The UK is a country with a highly developed high-tech industry, so to effectively attract FDI capital from the UK, Vietnam should build an ecosystem that can support domestic suppliers with sufficient management capacity to meet the needs of tier 1 and tier 2 suppliers of British businesses in Vietnam.

According to experts, investment capital from the UK to Vietnam is likely to increase thanks to many favorable factors. This includes close relations in many areas such aseducation , science and technology, industry and energy, as well as the appreciation of British businesses for Vietnam's commitment to reduce net emissions to zero by 2025. The UK Government has promised to provide technical support, expertise as well as establish partnerships and energy transition and climate change programs for Vietnam.

As of August 20, 2023, the UK had 542 direct investment projects in Vietnam with registered capital of about 4.29 billion USD, ranking 15/143 countries and territories investing directly in Vietnam. The processing and manufacturing industry accounts for the majority with 117 projects worth 1.59 billion USD, accounting for 38.1% of total investment capital.

The real estate market ranked second with 7 projects worth 701.44 million USD, equivalent to 16.7% of total investment capital. It was followed by the mining industry, wholesale and retail, auto and motorbike repair services, accommodation and food, water supply and waste treatment, science and technology, and education.

British investors have invested in 36 localities and offshore oil and gas projects, of which Ho Chi Minh City leads with 244 projects worth more than 909 million USD, equivalent to 21.6% of total British investment in Vietnam. Offshore oil and gas projects ranked second with five projects, total registered capital of 688 million USD. Dong Nai ranked third with 11 projects worth 670.8 million USD. The rest are in other localities including Hai Duong, Long An and Binh Duong.

In the first 8 months of 2023, the UK had a total of 34 new investment projects in Vietnam with registered capital reaching 48.3 million USD. Among European countries, the UK is currently the second largest foreign investor in Vietnam, after the Netherlands.

According to Deputy Minister of Industry and Trade Nguyen Sinh Nhat Tan, the UK-Vietnam Free Trade Agreement (UKVFTA) coming into effect from May 2021 and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that the UK joined on July 16, 2023 will be strong driving forces for the two countries to develop their two-way relationship, especially in the field of investment in the future./.

Thu Tra