The UK – Viet Nam Free Trade Agreement (UKVFTA) was promoting the influx of quality foreign direct investment (FDI) into Viet Nam.
The country is seeing drastic efforts in boosting reforms to unlock the potential for investment cooperation coupled with significant changes in the Government’s FDI attraction orientations.
The trade deal opened huge potential for Viet Nam to attract investment from the UK in the sectors of the UK’s strength, such as green finance, renewable energy, hi-tech manufacturing, digital transformation, healthcare, education and climate change adaptation.
Those were prioritised sectors in attracting FDI of Viet Nam as the country was striving to build a digital economy and promote green growth.
The latest updates showed that the UK was the 15th largest investor out of 139 countries and territories pouring capital into Viet Nam, with total investment worth nearly US$4.2 billion as of August 20, accounting for around 1 per cent of the total FDI value into the country.
In August alone, the UK invested in 25 new projects, bringing the total number of projects with UK investment to 478.
The existing investment from the UK was mainly poured into the manufacturing and processing industry, real estate business and mining. With the UKVFTA, there was significant room for Viet Nam to attract investment from the UK in renewable energy and hi-tech manufacturing as well as digital transformation.
Viet Nam committed at the 2021 United National Climate Change Conference (COP26) to achieve net zero emissions by 2050. Under the national strategy for green growth by 2030, the Government set the goal of greening economic sectors through the conversion of growth models and promoting the circular economy model through the efficient use of energy and resources based on the application of science and technology and digital transformation.
The Southeast Asian country’s FDI attraction policies were also switching to attract quality FDI which helped integrate the indigenous firms of developing countries into worldwide supply chain networks.
Chris Milliken, vice president of the British Chamber of Commerce in Viet Nam, at a workshop in June, said that he highly appreciated Viet Nam’s commitment to bringing net emissions to zero by 2050.
To achieve this goal, Viet Nam was currently quite open to receiving technological solutions to develop its renewable energy foundation, he said, adding that this was the area that the UK had an advantage in, especially renewable energy and energy saving.
According to the Multilateral Trade Policy Department under the Ministry of Industry and Trade, the UKVFTA gave Viet Nam the opportunity to cooperate with the UK in a number of important fields including industry and energy.
The department pointed out that the UK was a country with strengths in pharmaceuticals, high-tech industries, and energy saving, adding that Vietnamese enterprises have great opportunities to enhance investment cooperation with the UK and promote technology transfer from the UK.
Taking advantage of the UKVFTA, Vietnamese businesses also had the chance to participate in the UK’s industrial and energy supply chain as well as export industrial products to the UK.
According to the department, to integrate with the UK’s supply chain network, Vietnamese enterprises must pay attention to technical requirements and food hygiene and safety standards of the UK to prepare carefully in terms of business plans and product development.
In addition, enterprises also needed to pay attention to regulations related to sustainable development such as labour and environment because the UK was very interested in these issues, the department said.
Under the UKVFTA, Viet Nam had committed to higher standards of treatment for UK service suppliers and investors than those currently applied for other foreign service providers and investors under its WTO commitments. Many of these commitments lowered market entrance requirements or enlarged the scope of activities for UK services suppliers and investors than before.
Accelerate reforms
Viet Nam’s drastic effort in improving the business environment in recent years made the country an attractive and safe investment destination in the context that multinational corporations were seeking to diversify and optimise their supply chains after the COVID-19 pandemic.
The UKVFTA not only provided a push for trade and investment cooperation but also acted as a catalyst to accelerate institutional reforms and improve the business climate in Viet Nam, economist Vo Tri Thanh said.
The trade deal contributed significantly to creating a favourable business environment to attract quality FDI and establish supply chains, he added.
Viet Nam climbed 34 places to rank 70th in the World Bank’s Ease of Doing Business Rankings from 2007 to 2020.
In the race to attract quality FDI and take advantage of the UKVFTA and other trade deals in which Viet Nam was a member country, further efforts to improve the business climate, improve the FDI policies and legal framework were required, according to the Viet Nam Foreign Investment Agency.
In addition, it was necessary to actively enhance trade promotion activities in the UK to introduce the country and the people together with advantages and opportunities when investing in Viet Nam.
The UK investors should be encouraged to invest in sectors of their strengths, including pharmaceuticals, technologies, aviation and renewable energy, the agency said. — VNS