Huge potential for increased US investment to meet Vietnam’s infrastructure needs: experts
The latest status upgrade in Vietnam-US ties has generated great potential to lure further foreign direct investment (FDI), given Vietnam’s need for soft and hard infrastructure, experts said.
FDI inflows from the U.S. are yet to match the giant leap in bilateral trade since the Clinton administration lifted the decades-old embargo on Vietnam and the two former war foes normalized relations, said Ha Thu Thanh, chairperson of Deloitte Vietnam.
She was participating in a panel discussion organized in Hanoi Friday by the US embassy to mark the 30th anniversary of the trade embargo being lifted.
Thanh cited government statistics as saying that the U.S. ranked 10th in terms of registered FDI last year, but noted its actual FDI accounted for a mere 3% of total disbursement in Vietnam.
“Against the backdrop of fast growing trade (between the U.S. and Vietnam), I see much potential for incoming FDI from the U.S. after the two countries upgraded their ties to a comprehensive strategic partnership. It will be a new journey for the two countries to build up FDI [cooperation],” she said.
Thanh also said noted that the semiconductor industry holds great potential for U.S. companies to invest in Vietnam if the legal framework, corporate governance, and infrastructure were enticing enough.
Regarding indirect investment, she recommended that Vietnamese companies improve corporate governance to get more attention from U.S. private equity funds.
“Corporate governance has become more important, a ‘need to have’ instead of ‘nice to have.’ More money can come in via the stock market on the condition of good governance based on the best practices issued by the OECD (Organization for Economic Cooperation and Development).”
Bui Quang Minh, a Harvard Business School alumnus and founder of multi-industry ecosystem Beta Group, shared his personal experience in learning from American partners in growing his group’s start-up projects and the entrepreneurship spirit young Vietnamese get from the U.S., including the Shark Tank show.
Remarking on the potential areas in Vietnam that U.S. investors may get more involved in, Can Van Luc, chief economist of state-controlled bank BIDV, named venture capital in start-ups, energy, education, healthcare services, cultural exchanges, military cooperation, and digital transformation.
Elaborating on potential energy cooperation, Luc highlighted Vietnam’s ambition to have up to 30% of renewable energy in its power mix by 2030 from the current 16% ; and increase this further to 60% by 2050. To meet this goal, Vietnam needs capital, technology and other facilities that the U.S., which has strength in this industry, can provide, he said.
For Vietnam to capitalize on the Just Energy Transition Partnership (JETP), to which international institutions and foreign countries including the U.S. have committed more than $15 billion, the Vietnamese government should identify specific projects and programs, and one “terminal” contact point to supervise JETP enforcement, Luc said.
He told The Investor that American businesses with capital and technology are keen on developing renewable energy in Vietnam.
Luc emphasized that for Vietnam to go green, the government needs to have a detailed action plan to implement the National Power Development Plan VIII (PDP8) and issue better policies to develop renewable energy.
He felt that the U.S. can help Vietnam in formulating an action plan for the PDP8.
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