'After the worst consequences of the pandemic passed, great hope was lit in Vietnam. Other markets around the world were equally excited as the global economy grew at 5.5% in 2021, the highest growth rate since 1976. It's a feeling of optimism that has been around for a long time. then we have not yet felt it,'" said the Eurocham president.

Optimism is understandable, but the global economic "ship" has diverged in unpredictable directions

The Russia-Ukraine conflict has hit Europe hard and the global economy has been dealt a serious blow. As a result, spikes in energy prices spread across global markets, driving up commodity prices and disrupting supply chains. Consumer goods, textiles, electronic components… are becoming more expensive and scarcer in supply. Manufacturing-focused developing countries like Vietnam are particularly vulnerable to these pressures. It is likely that such impacts will become more severe and intensify as this conflict drags on. For the foreseeable future, risks and uncertainties will remain high.

"We are also observing China, Vietnam's northern neighbor, which continues to apply distance measures to cope with new developments of the disease. Nearly 55% of raw materials and accessories of Vietnam As long as China pursues a "zero COVID" strategy, leading to supply and logistics bottlenecks, Vietnam will still face problems, according to the Ministry of Industry and Trade. difficulties in procuring essential input materials such as electronic components, machinery parts, fabrics and chemicals, this fact threatens Vietnam's export growth" - Eurocham Chairman assessed.

 

Mr. Alain Cany, President of EuroCham, President of Jardine Matheson Group in Vietnam

The global labor shortage further constrains growth. In 2022, the International Labor Organization predicts a global shortfall in working hours equivalent to 52 million full-time workers losing their jobs worldwide. Vietnam, in particular, has found it particularly difficult to get the workers it needs to sustain its rapid economic growth.

The combination of all these factors has caused investor confidence to drop in the world and Vietnam is no exception. The Business Climate Index (BCI) of EuroCham in the second quarter of 2022 shows that confidence in Vietnam's investment environment has decreased by 4.4 points to 68.8. The United Nations (UN), World Bank, International Monetary Fund (IMF) and Organization for Economic Co-operation and Development (OECD) have also revised down their global growth forecasts.

In the context that the world is still unstable, Vietnam's outlook is quite positive

Although the World Bank forecasts global growth to weaken to just 2.9% for 2022, Vietnam is expected to grow at 6.5%.

The driving force behind this growth is the workforce of 56 million young, dynamic and increasingly tech-savvy workers, helping Vietnam become one of the largest workforces in the world in terms of sheer numbers. relative to and proportional to the population.

Given Vietnam's affordable and high-quality labor supply, it's not surprising that foreign investors want to move production to the country.

Manufacturing for export and foreign direct investment are two factors driving Vietnam's economic growth. As of 2021, Vietnam's exports account for 19% of GDP, up significantly from less than 1% in 2010. In fact, Vietnam's exports have now surpassed Malaysia and Thailand.

In 2021, Vietnam's export turnover will reach 336 billion USD, while Malaysia is 270 billion USD and Thailand is 271 billion USD.

The proof is a series of famous FDI projects implemented in Vietnam. LEGO, a member of EuroCham, is investing 1 billion USD in Binh Duong to build the factory. In the future, this will be the first factory in Vietnam and the second factory in Asia of LEGO.

Pegatron, Apple's supplier, currently plans to invest up to 1 billion USD in Vietnam. Foxconn has committed to pour 300 million USD to upgrade the production facility in Bac Giang. Samsung will start manufacturing semiconductor components in Vietnam from 2023, while Apple plans to produce Apple Watch watches here.

According to the Ministry of Planning and Investment, realized FDI in the first eight months of 2022 reached $12.8 billion, up 10.5% over the same period last year. Vietnam is continuously one of the leading FDI attracting countries in the world in terms of GDP, second only to Malaysia in the group of ASEAN economies.

In the context of multinational companies looking to expand their operations in Vietnam, partly due to the China+1 strategy and partly to the 15 Vietnam Free Trade Agreements joined, the FDI export market will remain open. continue to grow.

 

To attract these investors, stimulate private investment and make Vietnam a stronger economy, Mr. Alain Cany has some recommendations for how the two public-private sectors can work together effectively.

Vietnam ranks 70/190 in the World Bank's Doing Business Report 2020. Difficulties in setting up a business, registering assets and paying taxes are the main reasons mentioned in this report.

In a competitive global environment, the President of Eurocham recommended, Vietnam needs to create easier conditions for business activities to attract investment, share knowledge and transfer technology. To do that, Vietnam needs to give priority to improving the legal framework, administrative procedures and incentives for businesses.

Next, investors in both the public and private sectors need to accelerate the green transition.

With a coastline of more than three thousand kilometers, Vietnam is very vulnerable to climate change. Floods and saltwater intrusion caused by rising sea levels are wreaking havoc on people's homes and livelihoods. Forecasts for the future are equally bleak. In the event of a 100cm rise in sea level, half of the Mekong Delta will be underwater. The impact on people and property at that time was really beyond our imagination.

Faced with this situation, Vietnam has become a country with ambitions for sustainability. The COP26 conference in 2021 marks an important milestone for Vietnam as Prime Minister Pham Minh Chinh commits to achieving emission balance by 2050. Eurocham President said he can clearly see the Prime Minister's determination when met you in Glasgow. After COP26, ambitious goals for 2030 were set, including reducing energy consumption per GDP, promoting renewable energy, strengthening the digital economy and expanding forest cover. A comprehensive strategy, such as Vietnam's National Green Growth Strategy 2021-2030, has given the country a boost.

Certainly, the process of implementing big changes and developing renewable energy requires significant investments. The Vietnamese government will need to call for support for change and the FDI sector will play a key role in providing technology, expertise and capital.

He also encouraged everyone to join hands to contribute to the Government's climate program through funding, implementing circular economy initiatives, improving energy efficiency and using clean energy. . Together, we will pave the way, and we will help drive change across the entire Vietnamese economy.

Although EuroCham members are ready to assist Vietnam in addressing the shortage of green capital, its potential is still limited due to legal difficulties, bureaucracy and insufficient network infrastructure. response.

The same is true of important infrastructure in Vietnam, be it energy or transport infrastructure. According to EuroCham's latest Doing Business Index, one key area that Vietnam needs to improve to attract more FDI is infrastructure development. Regarding investment capital for infrastructure, the government is expected to use the state budget to meet two-thirds of the demand, the rest is expected to come from private investment.

FDI capital is available and can be supported. However, since the government's Public-Private Partnership (PPP) Investment Law took effect in early 2021, the number of public-private partnership (PPP) investment projects has actually decreased. gradually. In 2021 and 2022, almost no private capital will be poured into public infrastructure. 

According to him, the reason is that at present, the Government's legal framework is too simple, does not clearly define the rights of investors and is not enough to regulate many major issues related to the PPP method. He hopes that the Government will continue to clear administrative procedures and develop a comprehensive legal framework so that FDI companies can contribute more.

Vietnam also has ambitious goals for the digital economy . The goal is that by 2030, the digital economy will contribute 30% to GDP. Eurocham urges Vietnamese businesses to take advantage of the current favorable conditions and maintain Vietnam's digitalization progress by increasing investment in digital development and integrating digitalization in business models. On the state side, the government must encourage innovation, digitize procedures, and align regulations with international standards.

To develop Vietnam in all important areas including green transformation, infrastructure improvement, digital economy development, rise up the global value chain in manufacturing for export... , the two public and private sectors must work together to improve the human resource capacity of Vietnam . This is a very urgent task.

According to the Ministry of Labour, Invalids and Social Affairs, the proportion of "skilled" workers in Vietnam is only 26.1%. Government officials want to increase this to 75% by 2030, with 40% having official certificates. This will help ensure future employment for Vietnam's workers and lay a stronger foundation for future high-quality growth.

To this end, the government must focus on training to enhance the skills and abilities of workers. The private sector also plays a big role. By sharing knowledge and implementing talent development initiatives, we will maximize the potential of Vietnam's workforce.

For this and all other cooperation initiatives, the Eurocham representative recommends that the private sector should focus on small and medium-sized enterprises , as 96% of new domestic enterprises are medium and large enterprises. small.