Despite being seen as having a prime opportunity to attract high-quality foreign direct investment (FDI) in the high-tech sector amidst the global supply chain shift, Vietnam faces significant challenges in enticing “eagle” FDI enterprises into its market.
One major hurdle is the unstable power supply, which has raised concerns among FDI enterprises from the US, EU, Japan, and Korea. These businesses have emphasised the critical importance of a stable energy supply for high-tech manufacturing industries, which rely heavily on consistent power sources for uninterrupted operation. Ensuring access to renewable energy is deemed essential for enhancing the country’s competitive advantage and attracting global financial resources.
Representatives from various business associations, including the American Chamber of Commerce in Vietnam (AmCham), the European Chamber of Commerce in Vietnam (EuroCham), and the Japan Chamber of Commerce and Industry in Vietnam (JCCI), have stressed the need for collaboration between the public and private sectors to develop sustainable power sources. They have called for effective energy management practices and the promotion of large-scale liquefied natural gas (LNG) projects to support energy security.
Additionally, concerns have been raised regarding the inconsistency of preferential policies for FDI enterprises. Despite Vietnam’s efforts to attract high-tech FDI, issues such as the lack of incentives following the implementation of the global minimum tax and local electricity shortages have diminished its attractiveness to semiconductor businesses.
The absence of specific regulations regarding incentives for FDI enterprises post-implementation of the global minimum tax has created uncertainty among investors. Similarly, the narrow scope of support outlined in the draft Decree on the Investment Support Fund has raised concerns about its effectiveness in promoting investment in the high-tech sector.
Sustaining preferential policies over time is crucial for fostering a favourable investment environment and attracting long-term investment commitments. By providing certainty and consistency in government policy, Vietnam can reassure investors and ensure a level playing field for all stakeholders involved in the investment process.
