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Dec 18, 2018 / 09:34

Vietnam urged to take actions for seizing investment from China

The Vietnamese business environment can be improved by increasing productivity as well as reducing costs and business risks.

The government should further improve the country’s business environment to make it more stable, transparent and attractive to investors, especially in the context that many firms are considering relocating their production bases from China to Vietnam, experts said.
 
Vietnam should modernize education to ensure reasonable labor costs
Vietnam should modernize education to ensure reasonable labor costs
According to Michael Kelly, chairman of the American Chamber of Commerce (Amcham) in Vietnam, the trade war had affected manufacturers, leading to the restructuring of supply chains.
A survey by Amcham showed that one-third of the US firms working in China had either moved out of the country or were weighing the shift to other foreign markets to avoid the impact of trade tensions. Meanwhile, enterprises from other countries operating in China are also considering relocating their factories, and the Southeast Asia region is their destination.
Even though China remains a major global supplier, some firms have started plans to shift their business from China to other countries, including Vietnam. Foxconn Technology Group, Apple’s largest iPhone manufacturer and assembler, for example, is planning to build a new iPhone factory in Vietnam, aiming to minimize the impact of the trade war.
The latest report from Maybank Kim Eng also highlights a series of signs that FDI flows will pour into the Southeast Asian countries, mainly Vietnam, Thailand and Malaysia.
However, Kelly said, to receive the investment inflow, the government needs to improve the business climate as Vietnamese and foreign-invested enterprises should be given the equal support and fair environment to do business. This means that the relationship between the investors and the local authorities should be that of partnership and transparent.
Improved labor productivity
It is necessary to facilitate trade, create a more attractive, transparent and stable business environment and fully exploit the potential of Vietnam’s digital economy besides modernizing education to ensure reasonable labor costs, Kelly said.
According to Kelly, the Vietnamese business environment can be improved by increasing productivity as well as reducing costs and business risks.
“Firms are considering whether the Vietnamese workforce meets their requirements,” Kelly noted, adding that labor productivity determines Vietnamese enterprises’ efficiency and competitiveness. However, many surveys show that Vietnam’s education system is outdated, and the country’s graduates are inexperienced and unskilled.
As the local workforce fails to meet investors’ expectations, Vietnam will not be able to compete with its rivals in attracting fresh FDI capital.
Sharing the same view, Nihad Ahmed, senior economist at the global provider of economic analysis and forecasts Focus Economics, said that one of Vietnam's weaknesses is the lack of skilled workers, emphasizing that Vietnam is far behind China, Singapore, Malaysia and Thailand in this field while developing a highly skilled workforce is critical to attracting FDI into value-added industries.
Head of the Delegation of the European Union to Vietnam Ambassador Bruno Angelet also said that a work force with high technical expertise is the important factor that European investors require.
Besides bringing in opportunities of jobs with high income and international standard working environment, a skilled workforce will help Vietnam learn governance skills and get technology transfer, Angelet said. However, this is a challenge for Vietnam's education system in meeting the demand for human resources, he added.
Kelly suggested that the government should modernize and upgrade the national education system to turn out highly skilled graduates and successfully attract investors.
“Education modernization will ensure Vietnam will have a huge source of educated and skilled managers, engineers and technicians, which helps enhance the value chain for the economy,” Kelly said.
Meanwhile, Marko Walde, chief representative of the Delegation of German Industry and Commerce in Vietnam, recommended that Vietnam needs a vocational training system geared towards the practical needs of firms.