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VN has been active as foreign companies plan investment relocation

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Vietnam has been seen as an ideal destination for foreign companies looking for elsewhere to relocate production channels in a bid to diversify their supply chains in the post-Coronavirus pandemic.

VN has been active as foreign companies plan investment relocation
USAID helps Vietnam strengthen e-Government capacity. (Illustrative image. – Photo: VNA)

The process of investment relocation may take time but Vietnam has been active to grasp opportunities resulted from such strategic shift.

Successful containment of COVID-19

The world’s news outlets have praised Vietnam’s capacity to contain the pandemic which is still evolving swiftly around the globe, allowing the Southeast Asian country to re-emerge quickly and become one of the best performers in the global economy.

As current ASEAN Chair, Vietnam has actively activated virtual channels to ensure continuous communication among ASEAN member and this solution also helped ASEAN and its partners to stay connected during this crisis, sustain seamless coordination, and make quick and timely responses.

As all COVID-19 hot spots have been brought under control, the Government decided to resume international commercial flights to Guangzhou (China), Taiwan (China), Seoul (the Republic of Korea), and Tokyo (Japan) from September 15, and to Phnom Penh (Cambodia) and Vientiane (Laos) from September 22, to bring foreign investors and skilled workers to Vietnam.

Government’s determination

Last June, Prime Minister Nguyen Xuan Phuc set up a working group which is responsible for promoting foreign investment cooperation amid strategic shift of supply chains.

The working group, led by Deputy Prime Minister, Foreign Minister Pham Binh Minh, is tasked to formulate new policies to catch investment capital inflows early from multinational groups which are repositioning manufacturing facilities after the COVID-19 pandemic.

The Government is also extensively investing in major transport projects to further improve connectivity, which include the North-South Expressway and Long Thanh International Airport.

By offering investment opportunities, Vietnam has long been recognized as a hub for foreign investment. Last year, the United States News and World Report ranked Vietnam 8th in a list of 29 best economies to invest in.

The next closest ASEAN countries on the list were Malaysia (13th), Singapore (14) and Indonesia (18th).

Positive economic signs in Jan-Sep period

Vietnam’s GDP expanded 2.12% in the first nine months this year despite the emergence of the second wave of COVID-19 in late July, making it the only economy in ASEAN to have attained positive growth.

Exports still maintained growth momentum, increasing by 15% against the same period last year, in which domestic economic sector’s exports rose by 20.2%.

Though foreign investment inflows experienced a year-on-year decline of 18.9% in the reviewed period, the pledged volume was quite positive, with US$21.2 billion.

The World Bank forecasts that Vietnam’s GDP could reach 2.8% in 2020 and 6.7% next year while Prime Minister Nguyen Xuan Phuc urged subordinate levels to strive for growth rate of 2.5-3% this year.

Better indicators

First introduced in 2017 in the Government’s Resolution on major solutions to improve business climate, the Cabinet has used the Global Innovation Index (GII) as an important administration and management tool.

Along with three other developing countries, namely China, India and the Philippines, Vietnam has made the most impressive progress in terms of the GII rankings, currently placed 42nd out of 131 economies, up 17 spots since 2016.

Commenting on Vietnam’s efforts, General Director of the World Intellectual Property Organization (WIPO) Francis Gurry highlighted Viet Nam is among the group of lower middle-income countries with their GII 2020 going beyond their development level.

Business environment indicators have also improved constantly as evidenced by increasingly better global rankings.

Specifically, Vietnam ranked 67th out of 141 countries in the World Economic Forum’s Global Competitiveness Report, up 10 places compared to 2018.

The World Bank ranked Vietnam 70th out of 190 economies based on two main factors: improved access to credit information through data distribution from retailers and upgraded information technology infrastructure that make paying taxes easier for most businesses.

In terms of tourism, the Southeast Asian country jumped to 63rd among 140 countries and territories in the Travel & Tourism Competitiveness Index (TTCI) 2019, up four places compared to 2017 and 12 places against 2015.

On logistics, Vietnam’s position on the Logistics Performance Index (LPI) in 2018 has jumped 25 places compared to two years ago, to 39th among 160 surveyed countries, according to the World Bank.

For cybersecurity index, the country recorded impressive improvements, standing 50th on the Global Cybersecurity Index (CGI) rankings in 2018, up 50 places from a year earlier.

With a score of 0.693, Vietnam ranked 11th in the Asia-Pacific region, which was topped by Singapore, Malaysia and Australia.

The United States (US) News and World Report last month ranked Vietnam eighth in a list of 29 best economies to invest in, and the next closest ASEAN countries on the list were Malaysia (13th), Singapore (14th) and Indonesia (18th). 

FTA network

Alongside domestic reforms, Vietnam has taken steps toward trade liberalization and international economic integration into the global economy.

Up to now, Vietnam has signed 13 free trade agreements and joined negotiations on three others, with the regional comprehensive economic partnership expected to be signed by this year’s end.

The country’s embarkation on trade liberation has led to increased trade flows and foreign investment inflows.

More reforms needed

Former World Bank Country Director in Vietnam Ousmane Dione suggested it is necessary for Vietnam to change the mindset, motivation, aspiration and determination to make a change, and create breakthroughs in the use of high technology and digital technology for global integration.

The earlier reform seems to have reached its limits. In order for Vietnam to make the next jump, it is required to have a new reform to break the glass ceiling, a reform to overcome current challenges or also called “Doi Moi 4.0”, which leans more towards quality.

In order to do that, Vietnam needs to pay attention to a number of issues. First, state management needs to improve. It is necessary to improve innovation for the government system, which needs to take advantage of digital strengths.

Second, planning and capacity building needs to be strengthened, to make sure implementing agencies can develop and effectively implement policy.

The third issue is reporting and accountability mechanism. Vietnam needs more accurate, effective, transparent and timely analysis to assist with faster, more timely and more impactful decision making.

Vietnam needs to promote economic diplomacy to pave the way for businesses to expand their operation globally, to access new technologies and create new resources. For example, although Vietnam is currently the country that attracts the most foreign direct investment (FDI), Vietnam still experiences challenges in connecting foreign-invested enterprises with domestic private sector, lacking connectivity and value added.

Thanks to Vietnam’s active participation in free trade agreements, many Vietnamese enterprises are now reaching out to the world, but the majority have not yet taken the advantage to connect with the foreign investment sector to reach out. It is encouraging that when joining a bigger playground, Vietnam has a very good motivation to raise its own standards.

The Southeast Asian country should strengthen and mobilize many resources such as private capital, highly skilled human resources, innovation and infrastructure to grow fast and ensure sustainability, protect the environment, reduce emissions, deal with water pollution, landslides, protect resources, according to Ousmane Dione. VGP

Quang Minh

Source: https://vietnamnet.vn/en/business/vn-has-been-active-as-foreign-companies-plan-investment-relocation-682020.html

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China-ASEAN Expo opens, featuring digital economy, RCEP

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The 17th China-ASEAN Expo and China-ASEAN Business and Investment Summit kicked off on Friday, highlighting booming digital economy cooperation and the implementation of a recently signed major trade pact.

Chinese President Xi Jinping called for cultivating a closer community with a shared future for China and the Association of Southeast Asian Nations (ASEAN) when addressing via video the opening ceremony.

Chinese President Xi Jinping addresses the opening ceremony of the 17th China-ASEAN Expo and China-ASEAN Business and Investment Summit via video on Nov. 27, 2020. (Xinhua/Li Xueren)

This year’s expo aims to deepen cooperation in trade, the digital economy, science and technology, health, and other fields.

With an exhibition area of 104,000 square meters, the expo has 5,400 booths in Nanning, capital of south China’s Guangxi Zhuang Autonomous Region. More than 1,500 enterprises from home and abroad will participate virtually in the four-day event, according to the organizers.

The expo will also host 11 high-level forums and more than 160 economic and trade promotion activities.

China-ASEAN Expo opens, featuring digital economy, RCEP

Booming digital cooperation

This year is designated as the China-ASEAN Year of Digital Economy Cooperation. Strengthening digital economy cooperation was the common call of ASEAN leaders at the opening ceremony.

ASEAN’s digital economy is estimated to increase from 1.3 percent of the group’s GDP in 2015 to 8.5 percent in 2025, according to ASEAN Secretary-General Lim Jock Hoi, adding that China is leading the development of digital infrastructure and is an important partner of ASEAN in promoting the digital economy in the region.

This year’s expo also highlights the Regional Comprehensive Economic Partnership (RCEP), the world’s biggest trade pact, which was signed earlier this month by 15 Asia-Pacific countries including ASEAN’s 10 member states and China. It was a massive move for regional economic integration, multilateralism and free trade.

China-ASEAN Expo opens, featuring digital economy, RCEP

The signing ceremony of the Regional Comprehensive Economic Partnership (RCEP) agreement is held via video conference in Hanoi, Vietnam, Nov. 15, 2020. (VNA via Xinhua)

The expo features an exhibition area, and enterprises from RCEP countries including Japan, the Republic of Korea, Australia and New Zealand have participated in the event, according to Wang Lei, secretary-general of the expo’s secretariat.

High-level dialogue conducted during the expo will promote greater participation from RCEP members, said Wang, adding that the expo will help integrate the market advantages and resources of the 10 ASEAN members with the capital and technical advantages of other RCEP members.

“I believe that the RCEP will also provide a solid foundation for an open, inclusive, and rules-based global trade environment,” said Myanmar President U Win Myint at the expo’s opening ceremony.

Xu Ningning, executive president of the China-ASEAN Business Council, said that opening up the markets of the 15 countries to each other will bring about new changes and closer regional cooperation. 

(Source: Xinhua)

Source: https://vietnamnet.vn/en/business/china-asean-expo-opens-featuring-digital-economy-rcep-694444.html

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VNR petitions for reduction of infrastructure charge

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Passengers board a train. VNR has proposed an infrastructure use fee reduction – PHOTO: LE ANH

HANOI – Vietnam Railway Corporation (VNR) has proposed reducing the infrastructure charge from 8% of its railway transport revenue to 2% due to the difficulties caused by Covid-19.

The proposal has been sent to the Ministries of Transport and Finance and the Commission for the Management of State Capital at Enterprises.

This year, VNR may generate nearly VND3.2 trillion in revenue and its losses were estimated at VND643 billion. It has minimized its operation cost and furloughed its staff.

VNR and transport firms have encountered cash flow difficulties to maintain their operations. They are finding it hard to overcome their budget deficit, VNR Chairman Vu Anh Minh said.

VNR needs VND320 billion in 2020 and VND350 billion in 2021 to make good its losses.

VNR’s railway transport revenue was estimated at VND2.7 trillion this year. With this revenue, it will have to pay VND213 billion as the infrastructure use fee.

If the proposal to reduce the infrastructure use fee is approved, the fee will be cut by VND160 billion. The reduced amount in 2021 will be an estimated VND179.5 billion.

Thus, the firm can make good half of its budget deficit.

Source: https://english.thesaigontimes.vn/79630/vnr-petitions-for-reduction-of-infrastructure-charge-.html

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Mekong Delta expressway network expansion: infographic

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Source: https://e.vnexpress.net/infographics/economy/mekong-delta-expressway-network-expansion-infographic-4200146.html

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