Foreign firms provide long-term commitments

Friday, Oct 12, 2018 10:01

According to the Ministry of Planning and Investment (MPI), businesses from 129 countries and territories have invested an accumulated US$334 billion in over 26,500 projects in Viet Nam over 30 years of accepting foreign direct investment (FDI). FDI has proven to be a major driver of Viet Nam’s impressive economic growth.

Viet Nam News reporter Vu Hoa talks with a prominent economist and two foreign investors about the 30-year journey and a new vision for foreign investment in the face of the Fourth Industrial Revolution.

Nguyen Dinh Cung

Nguyen Dinh Cung, director of the Central Institute for Economic Management (CIEM) under the Ministry of Planning and Investment

How do you assess the contribution of FDI over the past 30 years?

FDI sector has contributed a lot of capital to Viet Nam’s development, accounting for a quarter of the total. These investments created jobs for labourers and contributed to growth. When FDI firms export, Viet Nam collects foreign currency to ensure trade balance. These businesses contributed up to 17 per cent of the country’s total tax revenue.

They have also made less tangible contributions by bringing in new business practices, models and management methods. The sector supports economic reform – we have to change ourselves to attract foreign investors. It has been a driving force in the country’s push toward a market economy.

What should we do to attract and select good foreign investors?

We need integrated criteria and better co-ordination between localities and sectors. Localities should not compete with each other to attract investment but should work together. Competition in this area means criteria are repeatedly lowered; it’s a race to the bottom. This weakens our position in negotiations with foreign investors.

We should understand our foreign investors and propose projects to facilitate discussions rather than passively waiting for investors to approach us. If we actively seek out FDI projects, we will have more projects that serve our socio-economic interests. This is a long-term vision that will promote development.

Jean Manuel Cros

Jean Manuel Cros, Human Resource Director of Auchan Retail Viet Nam – France’s second largest retail distribution network

What is your assessment of Viet Nam’s business environment after three years operating in the country’s market?

Auchan is very happy to invest in Viet Nam although it is a very competitive retail market. We still see great potential in this area.

We decided to invest in this market because we want to convey our vision to change lives.

Viet Nam has many convenience stores, supermarkets and large shopping centres from South Korea and Japan. However, Auchan comes from France. It is the first European retailer to bring imported products into Viet Nam and develop the retail market with a new vision.

After three years of operation in Viet Nam, Auchan has 21 stores in Ha Noi, Tay Ninh and HCM City. In the next four years, Auchan wants to develop 300 stores in Ha Noi and HCM City to become one of the most popular retailers in Viet Nam.

Did you co-operate with local partners when entering the market?

This is a totally new market for Auchan, so in order to be successful, we had to co-operate with local partners.

Products and locations are important for supermarkets. Local partners can help develop offerings that are better suited to Vietnamese customers.

Vietnamese customers are the main target when doing business in Viet Nam. It is necessary to have a clear strategy to work with localities to fight for the heath of our consumers.

If the Government wants retail businesses to develop in the Vietnamese market, it should simplify import procedures. Right now, the verification process for imports is complicated and lengthy, and some products are not admitted at all.

To create a well-trained retail workforce, the Government should establish a retail major in colleges and universities. This would allow enterprises to recruit high quality employees, which would boost retail development.

There are courses of economics and business administration, but not of retail. It is hard for the sector to develop when employees are not properly trained.

Brian David  Hull

Brian David Hull, country managing director of ABB Viet Nam

Having operated in Viet Nam for 25 years, what are your opinions on the country’s investment environment?

The investment environment has become more favourable for FDI during our time here.

ABB started working in Viet Nam in 1993. In 2002, the company became an entirely foreign-owned firm after opening offices in the country’s three major regions.

In 2008, the company built a plant to produce medium- and high-voltage electrical equipment in Bac Ninh Province.

These investments made ABB the only EU-based company producing transformers in Viet Nam, cementing its status as a leader in the nation’s energy and automation sectors.

So we have seen the investment environment improvement firsthand. The local People’s Committee has always supported us. They understand how to deal with foreign investors’ difficulties.

Of course, some things still need to be improved. It still takes quite a long time to get procedures approved, but the shift to e-Government should cut down on paperwork. I hope to see even more Government services available online moving forward.

We have a lot of procedures to follow. We do environment impact assessments and get approval from various committees. These things take weeks or months. If the Government can streamline this process, Viet Nam will be an even better place for foreign investors like ABB.

What areas does ABB focus on to maximise the market’s potential?

ABB sees a range of opportunities in this rapidly emerging economy, especially in project implementation, digitalising industries and infrastructure.

We all know the Fourth Industrial Revolution is coming to Viet Nam and the world. And of course, we have products that help support the transition.

Let’s take renewable energy as an example. The Prime Minister has mentioned this sector. Solar and wind power are key areas in which smart technologies are needed to create energy storage solutions. The wind doesn’t blow all day, and a cloud can always cover the sun.

We store excess energy and feed it back into the power grid to make the energy supply more stable.

Another area of opportunity is in smart homes and smart cities.

We can use new technologies to control lighting and heating.

We want to ensure that natural resources are used as effectively as possible. We will use Industry 4.0 technologies to do that in Viet Nam.

Viet Nam is pursuing sustainable development. Could you tell us about your strategies to leverage the Fourth Industrial Revolution in this field?

ABB is pioneering in industrial digitalisation and driving the Fourth Industrial Revolution.

Our digital-first portfolio is aimed at customers in utilities, industry, transport and infrastructure.

It is based on two clear value propositions: bringing electricity from any power plant to any plug and automating industries.

ABB is well positioned to tap into the significant opportunities in Viet Nam and deliver long-term profitable growth with its strong market presence, broad business scope, technology leadership and financial strength.

What should the Vietnamese Government do to further improve its investment environment?

I think implementing e-Government is an important step. The country should focus on logistics while digitalising import-export procedures. Legislative transparency needs to be improved. — VNS

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