2024 is a new opportunity to increase quantity and quality in attracting FDI

Mr. Nguyen Van Toan

How do you evaluate the picture of FDI attraction in 2023?

In 2023, Vietnam has reached a record number of registered FDI capital with USD 36.6 billion, an increase of 32.1% compared to 2022. Of which, newly registered capital reached more than USD 20 billion, an increase of USD 62.2 billion. 2%; adjusted registered capital reached nearly USD 7.9 billion, down 22.1%; the total value of capital contributed by foreign investors reached more than USD 8.5 billion, an increase of 65.7% over the same period. This result is possible thanks to Vietnam's always improving and attractive investment environment with many outstanding advantages. Stable politics, stable macroeconomics, promising economic growth, and outstanding diplomatic relations are Vietnam's great strides that help attract new investment. If well prepared, 2024 will be the starting year for a new wave of FDI into Vietnam.

As you just discussed above, a strong increase in FDI capital inflows into Vietnam in 2023 will be a solid launching pad, creating a favorable premise for Vietnam to attract FDI in 2024. How do you forecast the development? Expect FDI inflows into Vietnam this year?

Vietnam has a lot of experience in attracting FDI. In particular, in international relations, the push to upgrade diplomatic relations between Vietnam and the US has created a spillover effect on FDI capital flows from the US and Europe into Vietnam. For the EU, the Netherlands is the country investing the most in Vietnam. In addition, in 2023, Germany will also be a country with increased investment (about USD 366 million) in Vietnam, a sharp increase compared to 2022.

​In addition to available competitive advantages including a stable economic and political situation, favorable location for investment activities, a large number of signed free trade agreements, and an abundant labor force, Vietnam also has potential in rare earth - an important material in the development of the semiconductor industry, the development of microchips and electronics. This creates an advantage for Vietnam.

Many corporations from the US have come to explore the market and the possibility of cooperation with Vietnam in investing in the rare earth and semiconductor industries. Recently, Mr. John Neffeur, Chairman of the American Semiconductor Industry Association (SIA) and leaders of leading American semiconductor businesses, such as Intel, Qualcom, Ampere, ARM... have come to Vietnam to explore investment opportunities. In particular, Mr. Jensen Huang, Chairman and General Director of NVIDIA Group - the world's most valuable chip manufacturing corporation, also came to Vietnam to explore investment cooperation opportunities. Thus, opportunities to attract FDI investment in 2024 are opening up like in 2008 - the time Vietnam had just joined the WTO. Factors such as the battle to control core technology, chip technology, and future technology are opening up opportunities for Vietnam in attracting high-tech FDI.

To take advantage of the above opportunity, what solutions do we need to implement, sir?

The imposition of the global minimum tax from January 1, 2024 will lose Vietnam's tax incentive advantage in attracting FDI investment, but it will also bring benefits to Vietnam, helping to solve the transfer pricing problem in FDI investment activities. To adapt to the global minimum tax, Vietnam needs to change the investment environment to retain large FDI investors and attract new investors. 2024 is forecast to be a breakthrough year in attracting FDI. To attract and absorb high-quality capital, it is necessary to improve the investment environment, do a good job of intellectual property protection, reform administrative procedures, and soon improve the quality of Vietnamese human resources. .

The year, 2024 for Vietnam is a new opportunity, a new turning point to increase both quantity and quality of attracting FDI investment. The question is how to take advantage of FDI capital flows as China and Korea have done to become a developed country. 2024 is the starting point in attracting new, high-quality, high-tech FDI investment into Vietnam; therefore, Vietnam needs appropriate solutions to effectively receive FDI investment capital. In particular, Vietnam needs to have appropriate support policies so that domestic enterprises can participate in the export value chain of FDI corporations in the segment with technology and higher value than today.

To do this, many solutions need to be implemented synchronously such as: using global minimum tax revenue in the future to support attracting FDI investment; support domestic enterprises to participate more deeply in the supply and production chains of FDI enterprises. Besides, businesses can be supported through infrastructure development; or support Vietnamese enterprises to participate in the supply and production chains of FDI enterprises; Promote support for labor training; continue to improve the investment environment to attract new, higher quality FDI investors.