Vietnam repositions to draw UK investment

Experts are emphasising the need for Vietnam to redefine its competitive advantages to effectively attract foreign direct investment (FDI) from the United Kingdom (UK). Despite having cost-effective labor and ample human resources, experts suggest that Vietnam should focus on creating an attractive and transparent investment environment, streamlining administrative procedures through digitalisation, and enhancing infrastructure development.

Given the UK’s advanced high-tech industry, Vietnam is advised to establish an ecosystem supporting domestic suppliers with robust management capacities. This would enable them to meet the requirements of tier 1 and tier 2 suppliers of British foreign-invested enterprises in Vietnam.

Several favourable factors are expected to increase the UK’s investment in Vietnam, including strong relationships in education, science, technology, industry, and energy. The UK has expressed support for Vietnam’s commitment to achieving net-zero energy emissions by 2025 and plans to provide technical support, expertise, and establish partnerships and programs related to energy transition and climate change.

As of August 20, 2023, the UK had 542 direct investment projects in Vietnam with a registered capital of about 4.29 billion USD, ranking 15th among 143 countries and territories investing directly in Vietnam. The processing and manufacturing industry attracted the majority of UK investment, followed by the property sector and various other industries.

The UK is the second-largest foreign investor in Vietnam among European countries, following the Netherlands. The implementation of the UK-Vietnam Free Trade Agreement (UKVFTA) since May 2021 and the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in July 2023 are expected to further boost bilateral relations, especially in future investments. Deputy Minister of Industry and Trade Nguyen Sinh Nhat Tan highlights these agreements as strong drivers for the continued development of economic ties between the two nations.