Vietnam in a new foreign investment boom

American businesses could flock to Vietnam in a fourth foreign investment boom, following the recent visit of US President Joe Biden.

Prime Minister Pham Minh Chinh and President Joe Biden attend the Vietnam-US Summit on Investment and Innovation on September 11, 2023. Photo: Hai Nguyen

President Joe Biden's visit sparks new wave of investment interest Vietnam may soon see a massive influx of foreign capital, especially from the US, Nikkei reported. US President Joe Biden's visit to Vietnam last month, aimed at strengthening bilateral diplomatic ties, appears to have ushered in a new era of expanding economic cooperation between the two countries. A fourth wave of foreign investment in Vietnam may be taking shape. During a visit to chip giant Nvidia's headquarters in San Francisco on September 19, 2023, Prime Minister Pham Minh Chinh called on Nvidia CEO Jensen Huang to set up a manufacturing facility in Vietnam and develop it into a manufacturing hub in Southeast Asia. Nvidia is a leading chipmaker for use in artificial intelligence (AI). Responding positively to Prime Minister Pham Minh Chinh's enthusiastic proposal, Mr. Huang said that Vietnam is undergoing tremendous changes. The Vietnamese prime minister also met with other prominent figures in the US tech sector, including Microsoft founder Bill Gates and senior executives of Meta (formerly Facebook) and Elon Musk's SpaceX. These visits and meetings, part of the prime minister's busy schedule before attending the United Nations General Assembly in New York, show Vietnam's keen interest in fostering ties with US tech giants, Nikkei wrote. During his visit to Vietnam, President Joe Biden held talks with General Secretary of the Communist Party of Vietnam Nguyen Phu Trong. The two sides agreed to elevate bilateral relations to the highest level of Comprehensive Strategic Partnership. The two sides also signed a number of major business deals. Vietnam Airlines signed an initial agreement to buy 50 Boeing 737 Max aircraft worth about $10 billion. FPT Software announced a strategic partnership with US startup Landing AI. Synopsys, a leading semiconductor design company, has signed a memorandum of understanding with Vietnamese agencies to cooperate in helping the Vietnamese semiconductor industry improve its chip design workforce. Welcoming the fourth wave Historically, Vietnam has witnessed three significant booms in foreign direct investment. The first was in 1997 when Honda Motor began producing motorbikes in Vietnam. The second wave lasted from the early 2000s until the collapse of US investment bank Lehman Brothers in 2008, triggering the global financial crisis. Notably, South Korea's Samsung Electronics put its mobile phone manufacturing facility in Bac Ninh province into operation in 2009. The third boom is said to have taken off strongly in the mid-2010s. With increasing purchasing power, Vietnam has become a lucrative target for foreign consumer businesses. Japanese shopping giant Aeon opened its first store in Vietnam - Aeon Mall Tan Phu Celadon - in Ho Chi Minh City in 2014. Now, President Biden's visit could spur a wave of US investment in Vietnam. Biden's diplomatic move could be interpreted by US businesses as a green light to invest in Vietnam, Nikkei noted. Vietnam wants to shift from traditional labor-intensive industries such as garment manufacturing and electronics assembly to high-tech, higher value-added industries. Cooperation with US tech companies, especially those dominant in semiconductors and AI, will be crucial to transforming the country's industrial structure. The Prime Minister has directed relevant government agencies to train 30,000 to 50,000 semiconductor experts. With the international minimum tax rate expected to be introduced in 2024, Vietnam is considering new policy measures to attract multinational companies and is accelerating preparations for a fourth wave of foreign investment.

Laodong.vn