Vietnam ready to become global production hub

Vietnam is now ready to receive a new wave of investment capital and become a key global production hub, Deputy Minister of Planning and Investment (MPI) Tran Duy Dong.

Electronic production at Katolec Vietnam in Quang Minh Industrial Park, Hanoi. Photo: Pham Hung

“The country’s ongoing push for exports amid rising global demand would solidify Vietnam’s status as one of the most attractive destinations for multinationals and a key link of the global supply chains,” he told the local media.

A report from the MPI noted foreign direct investment (FDI) commitments to Vietnam in the first four months of 2022 stood at nearly $11 billion, of which nearly $5.3 billion were poured into fresh projects, up 92.5% year-on-year.

Meanwhile, additional capital injected into existing projects also surged by 92.5% year-on-year, while capital contributions and share purchases deals went up to $1.83 billion, up 74.5%.

“This shows a high level of trust from investors for Vietnam’s business environment, as well as the Government’s policies for economic recovery in the post-pandemic period,” he added.

A stable political environment and the Vietnamese Government’s high determination for economic recovery have resulted in the country’s GDP growth in the first quarter of 2022 at 5.03% year-on-year, higher than the 4.7% growth rate in the first quarter of 2021 and 3.7% of the same period in 2020.

Dong also pointed to the positive performance of trading activities during the first months of 2022, with foreign-invested firms spearheading the efforts for a combined trade turnover of $168.37 billion, up 15% year-on-year.

“Next-generation trade deals such as the CPTPP and EVFTA continue their active role as a growth engine for economic development in general, and trade performance in particular during the post-pandemic period,” he added.

Preparing for a new wave of investment

The vice minister, however, warned of fierce competition in attracting FDI amid difficult economic situations, especially among regional countries.

In this context, Dong expected Vietnam to focus on improving productivity in the services and production sectors, along with investment in the infrastructure system.

“The Government would continue to provide incentives in supporting industries development and policies to attract high-quality FDI projects,” he said.

The rapid development of e-commerce has also put more pressure on logistics services and storage facilities, for which Dong expected such fields would soon become a key part of the industrial property market.

“Vietnam has been preparing the required conditions to receive a new wave of investment capital and become a global hub for production, which could be realized by further improving the legal framework and business environment to attract quality FDI,” Dong said.

Building industrial parks of international standards

According to Dong, the Government is investing heavily to bring industrial parks and economic zones up to international standards.

“This is aimed at forming new production and supply chains so that Vietnam could further deepen its integration into the global value chains,” he said.

At present, the country boasts 335 industrial parks for a combined area of 100,000 hectares, which would further expand to meet growing demands from domestic and foreign investors.

“The development of industrial parks should be based on a sustainable growth model in socio-economic and environmental terms,” Dong said.