Positive indicators in attracting FDI to Vietnam in 2024

Mr. Edwin Chee, Chief Operating Officer of SLP

Mr. Edwin Chee said, foreign direct investment (FDI) has helped Vietnam become more competitive, provide more jobs, and raise revenue for the national budget.

- How do you evaluate the advantages of Vietnam in attracting FDI as well as the prospects for the economic landscape of Vietnam in 2024?

Vietnam’s strategic geographic positioning, providing unparalleled access to key ASEAN markets and major sea routes, significantly enhances its appeal for foreign direct investment. The nation’s resilience, even amidst global economic downturns and geopolitical tensions, is highlighted by a 2.9% increase in FDI to USD 20.25 billion within the first 11 months of 2023, clearly demonstrating its potential. The Vietnamese government’s dedication to economic stabilization and FDI enhancement, through the promotion of free trade and legal reforms, has favorably positioned Vietnam in the eyes of international investors. However, challenges related to energy security, a shortage of skilled labor, and underdeveloped soft infrastructure remain key hurdles. These issues may impede Vietnam’s progression up the value chain and its ability to attract higher-quality investments.

Looking forward to 2024, the global economic landscape, characterized by potential headwinds and a shortage of orders, poses anticipated challenges for Vietnam’s economic growth and FDI, particularly in the first half of the year. Despite these hurdles, there are positive economic indicators, including a recovery in investment, consumption, tourism, and exports, coupled with an acceleration in key infrastructure projects and active participation in various Free Trade Agreements (FTAs). These factors lay the groundwork for a more favorable long-term outlook in attracting FDI and sustaining economic momentum in Vietnam.

- Could you share the business development plan of SLP in 2024 in the field of smart logistics in Vietnam?

As a part of GLP, SLP has rapidly evolved into a top provider of modern logistics facilities in Vietnam since our establishment in the region in 2020. We’ve invested in nine state-of-theart logistics facilities, spanning nearly one million square meters across strategic locations like Bac Ninh, Hai Phong, Long An, and Vinh Long. Despite the macroeconomic challenges affecting Vietnam’s property market since 2022, the industrial real estate segment has shown resilience, suggesting a bright future for this sector. Recognizing this potential, SLP is intensifying efforts to expand our land bank, preparing for Vietnam’s economic rebound in 2024.

SLP built the Phu Ly bridge for the residents in Binh Minh town, Vinh Long province.

Our customer-centric approach sets us apart, offering readily available spaces designed to meet diverse logistics needs. Additionally, we provide custom solutions tailored to specific customer requirements, all in effort to help customers improve their operational efficiency and reduce costs. With five projects already operational, we are gearing up to complete other significant projects in 2024 and 2025. Our ongoing and upcoming projects are planned to cater to the increasing demand for readybuilt factories and warehouses, particularly from domestic and international investors and manufacturers. These initiatives underscore our commitment to bolstering Vietnam’s position as a key player in the global supply chain and logistics landscape.

- What comments do you have on the contributions of FDI to the Vietnamese economy, especially in the logistics and industrial real estate sectors?

Foreign direct investment has been instrumental in transforming Vietnam’s economic landscape, with the logistics and industrial real estate sectors being prime beneficiaries. SLP, leveraging our global expertise, has played a significant role in introducing modern concepts, technologies, and management practices in these sectors. This influx of FDI has led to the development of modern industrial parks and logistics facilities, which have not only attracted additional foreign investments but have also significantly boosted domestic manufacturing and export industries.

FDI’s influence in the logistics sector has been pivotal in enhancing supply chain efficiencies, thereby reducing costs and lead times. This is particularly crucial for Vietnam’s export-driven economy, helping it gain a competitive edge internationally. In the realm of industrial real estate, SLP’s approach of introducing advanced design, technologies, and best practices has empowered the development of modern, eco-friendly, and sustainable facilities that cater to a wide range of industries, from manufacturing to high-tech.

Moreover, FDI has played a critical role in job creation, significantly contributing to Vietnam’s socio-economic development. The spillover effects include the growth of ancillary industries, increased demand for local suppliers, and the development of local workforce skills. However, for Vietnam to fully realize FDI’s potential, continuous improvement of its business environment, infrastructure, and human capital remains essential.

- In your opinion, what does Vietnam need to do to modernize the logistics industry in line with expectations?

Modernizing Vietnam’s logistics sector is crucial for sustaining its economic growth and global supply chain integration. This requires a multi-pronged approach. Infrastructure development, including the upgrading and expansion of ports, highways, and airports, is essential for reducing logistics costs and improving domestic and global connectivity. Sustainable infrastructure development, with a focus on green logistics solutions, is also imperative.

Technological integration is another key aspect. The introduction and application of advanced technologies like AI, IoT, and blockchain are vital for enhancing efficiency and transparency in supply chain management. These technologies enable real-time tracking, predictive analytics for demand and inventory management, and streamlined customs procedures and operation processes.

Human capital development is equally important. Investing in education and vocational training, particularly in logistics and supply chain management, will ensure the workforce is equipped for the digital age. Additionally, policy support and public-private partnerships play a critical role. The government’s commitment to creating a conducive regulatory environment and incentivizing investment in logistics infrastructure and technology is essential. Collaborations between the government, local businesses, and international investors will foster innovation and best practices in the logistics sector.

- In your view, what areas should the Vietnamese government further improve to continue attracting FDI to Vietnam and address existing bottlenecks?

To attract more FDI and address existing bottlenecks, Vietnam should focus on enhancing its legal and regulatory frameworks, ensuring transparency, consistency, and ease of doing business. This includes simplifying administrative procedures and ensuring an efficient legal system for dispute resolution. SLP actively participates in dialogues with the government, sharing insights and recommendations to improve the industry. Continued investment in quality infrastructure across urban and rural areas is crucial for balanced economic development. This includes transportation, utilities, and digital infrastructure, enabling efficient business operations nationwide.

Developing a skilled workforce is vital for attracting high-value FDI. Investment in education and training programs aligned with the needs of modern industries, including technical and vocational education, is necessary.

Promoting research and development (R&D) and innovation is key to advancing up the value chain. Establishing R&D centers, technology parks, and innovation hubs will attract FDI in high-tech and knowledge-intensive sectors.

Lastly, fostering a sustainable and inclusive economic development model is important. This involves focusing on green growth strategies, promoting sustainable business practices, and ensuring that FDI benefits are widely distributed. SLP’s commitment to green initiatives and inclusive practices aims to set a standard for responsible foreign investment that aligns with Vietnam’s development goals.

- Thank you!