Vietnam should no longer be wary that Chinese investments tend to be of low-quality, using outdated technology. Instead it should actively welcome Chinese investors with cutting-edge technologies, said an expert.
China’s investment flow into Vietnam has surged since 2011, making it a top 10 investor in the country with notable changes in size, industry and localities, Nguyen Van Toan, vice chairman of Vietnam’s Association of Foreign Invested Enterprises (VAFIE), told The Investor.
Despite the Covid-19 pandemic, Chinese investments in Vietnam have remained robust, making it the third or fourth largest investor, he noted.
Toan acknowledged that Vietnamese provincial authorities used to be concerned that Chinese investments were typically labor-intensive, used outdated technologies and triggered frequent labor disputes.
But things have changed. China has achieved tremendous technological advances that are among the best in the world, especially in modern fields like renewable energy and semiconductors.
“If Vietnam can make use of opportunities to attract Chinese investments in industries with advanced technology, it will benefit both countries,” Toan said.
He expected Chinese investment to rise strongly in the near future, gradually shifting from small-scaled projects with backward technology, and focusing on renewable energy and semiconductors with hundreds of millions of U.S. dollars for each project.
Vietnam’s competitive edge included stable politics, “golden” demographics, high degree of economic openness, membership in a host of free trade agreements, improved infrastructure and the government’s determination to push administrative reforms.
Furthermore, given the cultural similarities between the two countries, Vietnam was in a better position than other countries in attracting investment from China.
However, this should not be taken for granted, Toan cautioned.
He recommended that Vietnam guarantees a workforce skilled enough to meet foreign investors’ needs and boost linkages between Vietnamese and foreign enterprises. Vietnam should also learn from China’s experience in luring foreign investment, encouraging domestic firms to actively engage in technology transfers and establish research and development centers.
“It’s time we got over concerns over outdated technology and labor disputes when seeking for Chinese investment. It’s imperative that we beef up our capacity to select proper projects and supervise them,” Toan added.