HSBC Vietnam’s CEO, Mr. Tim Evans, recently penned an article outlining key strategies for Vietnam to enhance its appeal to foreign investors. He emphasizes the urgency of addressing three critical areas: productivity, logistics, and the legal system.
Mr. Evans observes that the global economy is evolving rapidly, making it crucial to stay abreast of trends that are transforming economies worldwide and within the region.
He predicts that supply chains will expand and diversify, particularly as economies seek to minimize trade risks with China. Despite China being a primary import source for nearly 70 countries, ASEAN, and especially Vietnam, stands to gain from this shift in trade dynamics.
As Western companies aim to decrease reliance on China, they’re turning to other Asian markets like Vietnam and India for sourcing products. This shift has led to increased foreign direct investment (FDI) in these regions, surpassing China, especially in manufacturing. China is also extending its supply chains into neighboring countries, including Vietnam.
Vietnam’s government should craft its FDI strategy with a clear understanding of its competitive position within ASEAN and consider other markets like India or Mexico. Singapore and Malaysia currently lead in the semiconductor industry, while Vietnam is gradually making inroads into the electric vehicle and semiconductor sectors, focusing on high-value goods and attracting leading electronics manufacturers.
Mr. Evans highlights the need to identify and address the “bottlenecks” that foreign investors find most challenging. He points out three key issues:
Firstly, Vietnam must enhance the quality and accessibility of its labor force and boost productivity as it ascends the quality ladder. The country’s labor productivity is lower than that of other major ASEAN markets.
Secondly, Vietnam’s logistics efficiency needs improvement. It falls behind China, Malaysia, and Thailand, with deficiencies in logistics capacity, delivery times, and traceability. The country’s logistics infrastructure doesn’t meet international standards, and there’s an over-reliance on road transport, despite a growing need for sea transport and better seaport facilities.
Lastly, the legal environment is a significant consideration for investors. The HSBC Global Connection survey indicates that legal changes pose a considerable challenge for foreign businesses in Vietnam. Establishing a stable and user-friendly legal framework is essential for attracting further investment.
By tackling these issues, Vietnam can position itself as a more attractive destination for foreign investment.
Related
Source: Vietnam Insider