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Henig: Vietnamese News
Việt Nam – ROK relations to blossom in the next century
December, 18/2022
As the US opened the golden age of Pax Americana in the previous century, the next era would come a period of Pax Asiana, of which Việt Nam and ROK would take the centre stage.
HÀ NỘI — Việt Nam and the Republic of Korea (RoK) have made remarkable progress in cooperation in various fields over the past 30 years, according to Nguyễn Đức Hải, vice chairman of the National Assembly.
Hải was speaking at the ‘Korea – Vietnam Economic Cooperation Forum 2022’ on Friday.
He said RoK remained Việt Nam’s largest partner in foreign direct investment (FDI), the second in official development assistance, and the third in trade. Meanwhile, Việt Nam has positioned itself as the largest economic partner of RoK among ASEAN countries.
By late October, RoK has initiated over 9,400 projects in the country, equivalent to more than US$81 billion of registered capital.
“Việt Nam will create a more favorable investment climate to draw in more foreign investors, especially RoK investors,” said Hải.
Trần Duy Đông, Deputy Minister of Industry and Trade, underlined RoK investment as a driving force behind economic restructuring in Việt Nam. Over the past three decades, the destination of investment has shifted from labour-intensive industries to high-tech and high-value-added industries.
“Accumulated RoK investment in Việt Nam and bilateral trade are aimed to reach $100 billion each by 2025,” said Đông.
The deputy minister called on RoK enterprises to give investment priority to certain fields, including digital transformation, biology technology, and clean energy, to help Việt Nam move one step closer to its development goals in the short term.
Vũ Tiến Lộc, chairman of the Vietnam – Korea Friendship Association (VIKOFA), said RoK enterprises have made a great contribution to Việt Nam’s economic growth by creating jobs and promoting ‘made in Vietnam’ products globally.
However, more effort is still needed to upgrade RoK investment in the country, laying the groundwork for the deep involvement of Vietnamese small- and medium-sized enterprises in RoK’s global supply chains.
“The miracle on the Han River in RoK is an inspiration for the miracle on the Hồng River in Việt Nam in the years to come,” said Lộc.
He also said that the next wave of RoK investment in the country should be based on three pillars – innovation, environmental friendliness, and close ties with local enterprises. Without the pillars, ROK enterprises would not be able to take root locally.
Jeong Man-ki, vice chairman of the Korea International Trade Association, revealed that the minimum wage in Việt Nam is ranked 5th in the ASEAN region and is rising rapidly.
He anticipated that in the future, Việt Nam would face stiffer competition from other countries in this regard. One of the major competitors is Indonesia, which saw its FDI in 2022 grow by 40 per cent year-on-year.
“Minimum wage in RoK was 72 times higher than that in Việt Nam in 2009. Now the proportion is seven to one,” said Man-ki.
The vice chairman urged Việt Nam to improve its investment environment by introducing favourable policies for companies willing to relocate their factories to the country and by avoiding double taxation.
Bùi Quang Tuấn, director of the Vietnam Economic Institute, remarked that bilateral trade is growing steadily, yet skewed in favour of the RoK. Remarkably, Việt Nam was facing an accumulated trade deficit of $32.8 billion with RoK in 2021.
“RoK should import more Vietnamese goods to improve Việt Nam’s balance of trade,” said Tuấn.
The director underlined low competitiveness, low productivity, and low level of involvement in global supply chains as the disadvantages that Việt Nam needs to overcome to gain ground internationally.
Member of the National Assembly of South Korea Hong Sung Kook was concerned that in Việt Nam the proportion of the digital sector to the economy is outweighed by that of the realty sector.
“It is not easy for foreign investors to engage in the realty sector,” said Kook.
He urged Vietnamese enterprises to embrace green growth to be able to improve their involvement in global supply chains, which have been moving toward sustainable development.
Choi Joo Ho, CEO of Samsung Vietnam, revealed that Samsung Vietnam had drawn up a plan to support local component suppliers in the medium- and long-term.
From 2015 to 2021, the corporation dispatched specialists to 400 suppliers to help them improve their competitive advantages and output capacity. Between 2018 and 2021, the corporation proceeded to help them enhance their human resources.
“Thanks to the support, the suppliers saw its output rise by 40 per cent, its errors fall by 50 per cent, and its unsold inventory drop by 36.4 per cent,” said Ho.
From 2022 onwards, the corporation will support them in building smart factories and improving their positions in Samsung’s supply chains.
Ko Sang Goo, deputy chairman of VIKOFA, asserted that the influence of the two countries will go beyond Asian borders to become global in the next 30 years.
He said the Roman Empire opened a golden age of Pax Romana in ancient times; the US Pax Americana in the previous century. He believed that the next era would come a period of Pax Asiana, of which Việt Nam and RoK would take the centre stage.
“The two countries will make history in the next 100 years,” said Goo. — VNS LINK
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Henig: Việt Nam faces both opportunities and challenges amid changes in global FDI flow
December, 19/2022
Deputy Director of the Việt Nam Institute of Economics Lê Xuân Sang spoke to Vietnam News Agency about the opportunities and challenges facing Việt Nam in attracting foreign direct investment (FDI).
For the first time, Việt Nam is among the top 20 countries attracting the most foreign direct investment (FDI) capital in the world, according to World Investment Report 2021 by the United Nations Conference on Trade and Development (UNCTAD).
Deputy Director of the Việt Nam Institute of Economics Lê Xuân Sang spoke to Vietnam News Agency about the opportunities and challenges facing Việt Nam in attracting foreign direct investment (FDI).
Seeing the country’s advantages, investors are placing trust in Việt Nam as part of the global supply chain. In the context of the COVID-19 pandemic and the shift of global supply chains, is there a trend of shifting the flow of foreign investment?
In recent years, the trend of FDI capital flow has changed significantly. Under the influence of important global factors, the US-China trade war, the COVID-19 pandemic, and the energy crisis, especially the conflict between Russia and Ukraine, global FDI flow has been changing a lot.
First of all, FDI has also changed slightly in quantity, FDI mainly inflows into sustainable development areas like renewable energy and green growth FDI projects.
The second group that is also quite important and has taken over recently is the digital economy.
It can be seen that the trend of FDI towards sustainable development has been formed before.
However, under the impact of climate change as well as the conflict between Russia and Ukraine, this trend may face difficulties and become increasingly impacted from 2022.
In addition, FDI in the field of sustainable development also has unfavourable trends. For example, with FDI projects on wind power, when finished, the electricity is too weak. Other projects such as solar power are affected by insufficient sunlight.
The conflict between Russia and Ukraine has made this worse and many countries have had to switch from renewable energy to coal, which is harmful to the environment.
Regarding the digital economy group, the COVID-19 pandemic has had a far-reaching impact on this sector.
The US-China trade dispute as well as the impacts of the recent COVID pandemic also caused supply chain disruptions, especially related to the semiconductor chip sector.
Businesses move from global trends to repositioning investment positions, moving to the consuming markets, the electronics sector to the US and Europe (EU).
In terms of territories, Asia-Pacific remains the largest FDI recipient region and India has surpassed China to become the largest FDI recipient for the first time. Because China has suffered a negative impact from the COVID-19 pandemic and maintains a zero COVID strategy, the disruption of the global supply chain has aggravated the problem, causing low FDI attraction.
What do you think about the opportunities and challenges of Việt Nam in attracting investment flow?
Before looking at the opportunities and challenges, we must know that there are main driving forces that make FDI flow into a country. The first driving force is FDI capital goes to improve investment efficiency as domestic conditions are no longer effective. The second driving force is to exploit the existing market. The third is to exploit resources or get strategic assets. FDI in Việt Nam belongs to the first two types.
Việt Nam with a population of more than 92 million has a relatively young population. It is the only country with a large population participating in 16 Free Trade Agreements (FTAs). This helps to attract FDI into the country, and at the same time, investors can dominate the global market, especially under the positive impact of the new generation FTAs.
Việt Nam mainly has relatively cheap labour and real estate, which create many favourable conditions for foreign investment. Besides, Việt Nam’s political and economic environment and geo-economic position are quite favourable.
Việt Nam is located in the dynamic Asia-Pacific region, close to the large Chinese market and especially the logistics transport is not interrupted.
In the short term, the advantages for Việt Nam to attract FDI are still cheap labour and land rent. But in the long term, it has disadvantages including insufficient infrastructure compared with other countries in the region, and the quality of human resources remains low, especially for domestic enterprises. Additionally, its supporting industry is not developed enough for FDI enterprises to improve efficiency as well as increase initiative when economic shocks or regional/global geopolitical conflicts happen.
Many experts believe that the connection between domestic and foreign enterprises in Việt Nam is still limited. Currently, few Vietnamese enterprises can participate in the global value chain. In your opinion, what is the solution?
A shortcoming is that domestic enterprises are still weak in meeting the needs of FDI enterprises. The first weakness is uncompetitive price, the second weakness is that quality is not high and the third is the ability to deliver on time. In addition, Việt Nam’s supporting industry is still weak.
Finally, Việt Nam has not yet designed groups of policies and mechanisms to promote linkages between domestic enterprises and FDI enterprises.
How do we adjust policies to attract foreign investment?
The fundamental adjustment is what Việt Nam has done but it has not worked effectively. We need policies to improve the quality of human resources. Many localities with good-quality human resources will help attract FDI. VNS LINK
