Vietnam PM touts investment climate with pro-growth pledge in China

The Vietnamese government will continue to focus on boosting economic growth while ensuring a stable and peaceful environment for foreign investors, Prime Minister Pham Minh Chinh has stated, as the country attempts to draw further overseas investment.

Chinh was speaking at a working breakfast with World Economic Forum (WEF) founder and executive chairman Klaus Schwab and executives of two dozen WEF member corporations in Dalian city, China.

The discussions focused on Vietnam’s economy and its role in the global supply chain.

Despite Covid-19, geopolitical tensions, competition between major powers and climate change problems, Vietnam managed to have its GDP expand 8.02% in 2022, 5.05% in 2023, and 5.66% in Q1/2024. The growth rate is expected to increase towards the year-end, Chinh said.

The country has also managed inflation well and its currency has fared better than many regional peers, he noted.

In the coming months, the Vietnamese government will take a series of measures to achieve sustained economic growth including a measured combination of monetary and fiscal policies; utilizing a host of existing free trade agreements; advocating further trade liberalization; and achieving breakthroughs in terms of institutions, infrastructure, and workforce, he stressed.

Chinh also emphasized that besides renewing traditional drivers, the government will foster new driving forces that are global trends, including digital, green, circular and sharing economies.

The PM reiterated the nation’s commitment to maintaining political stability and safeguarding legitimate and legal interests of foreign investors while relentlessly improving the investment environment for their long-term operations in the country.

He reaffirmed the pledge to prevent a reoccurrence of the power shortages of early summer 2023. The country is capable of ensuring power supply this year although electricity consumption has risen 15% and peaked at one billion kilowatts-hours recently.

"Moreover, Vietnam is speeding up its green energy transition, preparing conditions to allow direct power purchase agreements (DPPA), and is about to launch incentives for rooftop solar and LNG power," Chinh noted.

The government will also issue regulations to implement the Global Minimum Tax and switch incentives from taxes to finances, fees and land rentals for priority projects, the PM said.

Chinh also stressed Vietnam will become more selective about foreign direct investments, giving priority to emerging and high-tech areas that have great spillover effects and carry strategic significance, like semiconductors and artificial intelligence.

He called on the WEF and partners to share their expertise and recommendations for better policy making.

Strong foreign investor commitments

Brand Cheng, chairman and CEO of Foxconn, a leading contractor of major tech giants such as Apple, praised Vietnam’s fast growth and noted his firm’s swift expansion in the country.

The Taiwan-headquartered firm has invested around $4 billion in five provinces in Vietnam, employing some 80,000 people. It began operating its latest plant in April 2024, just a year after mentioning it in a meeting with PM Chinh in January 2023, Cheng noted.

A PepsiCo representative present at the breakfast meeting noted that the company had invested $850 million over more than 30 years in Vietnam.

PepsiCo will ramp up its investment in agriculture and food processing, and fostering plastic recycling, the rep said.

Registered foreign direct investment (FDI) in Vietnam reached $11.07 billion in the year to May 20, up 2% year-on-year. Disbursed FDI was up 7.8% to $8.25 billion.

At a separate meeting with PM Chinh the same day, Klaus Schwab said that the WEF and member companies highly regarded Vietnam’s outlook and business environment. He said they saw Vietnam as a robust economy that was making effective use of Industry 4.0 advances.

The two leaders agreed to accelerate implementation of a bilateral memorandum of understanding on cooperation in 2023-2026 that was signed last year in China.

They also agreed to make the Center for the Fourth Industrial Revolution (C4IR), located in Ho Chi Minh City, a regional connection hub.