Vietnam needs to optimize its competitive advantages to attract FDI from the United Kingdom.

Experts emphasize that Vietnam needs to redefine its competitive advantages in the new phase to be ready to receive foreign direct investment (FDI) from the United Kingdom.

Ho Chi Minh City is leading in attracting FDI from the United Kingdom. (Illustrative image: Giang Son Dong)

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

The United Kingdom has a highly developed high-tech industry, so to effectively attract FDI from the UK, Vietnam should build an ecosystem that can support domestic suppliers with sufficient management capabilities to meet the needs of Tier 1 and Tier 2 suppliers of UK businesses in Vietnam.

According to experts, investment capital from the UK into Vietnam is likely to increase significantly due to several favorable factors. These include close ties in various sectors such as education , science and technology, industry and energy, as well as the high regard of British businesses for Vietnam's commitment to achieving net-zero emissions by 2025. The UK government has pledged to provide technical and expert support, as well as establish partnerships and programs for energy transition and climate change mitigation in Vietnam.

As of August 20, 2023, the UK had 542 direct investment projects in Vietnam with a registered capital of approximately US$4.29 billion, ranking 15th out of 143 countries and territories investing directly in Vietnam. The processing and manufacturing industry accounted for the majority with 117 projects worth US$1.59 billion, representing 38.1% of the total investment capital.

The real estate market ranked second with 7 projects, valued at US$701.44 million, equivalent to 16.7% of total investment. This was followed by mining, wholesale and retail trade, automotive and motorcycle repair services, accommodation and food, water supply and waste treatment, science and technology, and education.

British investors have poured capital into 36 localities and offshore oil and gas projects, with Ho Chi Minh City leading with 244 projects totaling over US$909 million, equivalent to 21.6% of total British investment in Vietnam. Offshore oil and gas projects ranked second with five projects and a total registered capital of US$688 million. Dong Nai ranked third with 11 projects worth US$670.8 million. The remainder belonged to other localities including Hai Duong, Long An, and Binh Duong.

In the first eight months of 2023, the UK had a total of 34 new investment projects in Vietnam with registered capital reaching US$48.3 million. Among European countries, the United Kingdom 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), which came into effect in May 2021, and the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), which the UK joined on July 16, 2023, will be strong drivers for the two countries to develop bilateral relations, especially in the field of investment in the future.

Thu Tra