Foreign Direct Investment (FDI) is a crucial source of capital contributing to Vietnam’s economic development. In recent years, amid changes in both domestic and international economic landscapes, Vietnam has been strategically reforming its institutional and policy framework to enhance FDI attraction and efficiency. Mr. Do Van Su, Deputy Director of the Foreign Investment Agency under the Ministry of Planning and Investment, shared his insights with Economic and Forecast Magazine on this topic.

Interviewer (IV): Vietnam’s legal framework for FDI attraction has undergone multiple reforms and is considered competitive compared to other countries. Could you highlight the key features of Vietnam’s current FDI policies?

Mr. Do Van Su: In response to the evolving domestic and global economic landscape, Vietnam has committed to strategic policy adjustments to enhance FDI attraction and quality. The legal framework has been refined and formalized through various legal documents. Notably, for the first time in over 30 years of opening its economy to foreign investment, the Politburo issued Resolution No. 50-NQ/TW, outlining directions for improving the institutional and policy framework to enhance the quality and effectiveness of foreign investment cooperation by 2030. This resolution emphasizes a selective approach to FDI, prioritizing quality, efficiency, technology, and environmental protection as key evaluation criteria. Vietnam focuses on attracting projects involving advanced technology, new and high-tech innovations, clean technology, modern governance, high added value, and those that promote supply chain connectivity and global production networks.

To implement the directives and objectives of Resolution No. 50-NQ/TW, the Prime Minister issued Decision No. 667/QD-TTg, approving Vietnam’s Foreign Investment Cooperation Strategy for 2021-2030. This strategy outlines key tasks and solutions, including:

1. Improving the business investment environment and enhancing economic competitiveness.
2. Developing an ecosystem for science, technology, and innovation.
3. Innovating and increasing competitiveness in FDI attraction.
4. Promoting supporting industries and fostering linkages.
5. Leveraging internal strengths and competitive advantages to improve FDI effectiveness.
6. Enhancing international economic integration and Vietnam’s global standing.
7. Modernizing and diversifying investment promotion efforts.

Recently, with the global minimum tax set to take effect on January 1, 2024, the National Assembly has mandated the Government to issue a Decree establishing, managing, and utilizing an Investment Support Fund, introducing a new investment support approach aligned with current needs.

IV: What are the tangible benefits Vietnam has gained from these well-structured policies in attracting FDI?

Mr. Do Van Su: Despite global and regional economic challenges and risks, alongside significant restructuring in investment flows, Vietnam’s proactive, decisive, and timely policies have helped maintain macroeconomic stability and achieve positive FDI growth. Notable achievements include:

• Registered FDI capital reaching $496.7 billion, with implemented capital nearly $318.9 billion, placing Vietnam among the top 20 FDI destinations worldwide.
• A more open and favorable investment environment, aligning with domestic socio-economic conditions and international economic integration requirements.
• A significant contribution from the FDI sector to Vietnam’s economic and social development, accounting for 25% of total social investment, over 50% of industrial production value, nearly 75% of export value, and more than 27% of state budget revenue, while creating over six million direct jobs.
• Vietnam’s economy has risen to the top 40 globally in scale and is among the top 20 in global trade, playing a vital role in 17 free trade agreements (FTAs) covering 60 key global economies.
• FDI flows have continued shifting towards high-tech, large-scale projects, particularly in electronics, semiconductors, and advanced manufacturing industries.
• Foreign investment continues to integrate Vietnam into the global economy, enhancing its credibility as a safe and attractive destination for investors. Vietnam has signed 17 FTAs, including next-generation agreements such as CPTPP, EVFTA, and RCEP, securing free trade relationships with over 60 countries, including major markets worldwide.

IV: What key lessons has Vietnam learned from implementing its FDI attraction policies, and what are the future strategic directions?

Mr. Do Van Su: Key lessons from Vietnam’s FDI attraction policies include:

• Strong leadership from the Party, Government, and Prime Minister has elevated Vietnam’s global standing and investor confidence.
• A comprehensive and competitive FDI legal framework is crucial for attracting investment and ensuring a favorable business environment.
• Consistently improving the business climate and addressing challenges for investors have enhanced Vietnam’s investment appeal.
• Providing essential investor requirements—high-quality human resources, well-developed industrial infrastructure, supporting industries, and streamlined administrative procedures—is vital for attracting major investors.
• Timely policies and measures are necessary to turn challenges into opportunities, particularly regarding global investment shifts and the reallocation of major corporations’ production bases.

Future FDI attraction strategies will focus on prioritizing projects with advanced, high-tech innovations, modern governance, high added value, and strong linkages to domestic industries and global supply chains. Targeted investment attraction will prioritize strategic regions, partners, and industries such as:

1. Science, technology, and innovation; research and development.
2. Green economy, digital economy, circular economy, and knowledge economy.
3. Semiconductor manufacturing, new energy (e.g., hydrogen), and renewable energy.
4. Green finance and financial hubs.
5. Biotechnology and healthcare.
6. Electronic components and electric vehicles.

IV: How is Vietnam establishing investment screening mechanisms to attract high-quality FDI inflows?

Mr. Do Van Su: Following Resolution No. 50-NQ/TW, the Ministry of Planning and Investment has developed two key evaluation frameworks:

• FDI Effectiveness Assessment Criteria (7 indicators): Investment scale, labor impact, technology, technology transfer, linkages and spillover effects, environmental impact, and national security.
• Selective FDI Attraction Criteria (42 indicators): Economic indicators (29), social indicators (8), and environmental indicators (5).

These frameworks are designed to analyze and assess FDI effectiveness, provide standardized comparisons across ministries and localities, support government decision-making, and screen high-quality investments with high added value and global supply chain integration.

IV: Given the intense competition for FDI, especially in the semiconductor industry, how is Vietnam positioning itself in the global supply chain?

Mr. Do Van Su: Amid global supply chain diversification and geopolitical shifts, Vietnam is emerging as an attractive destination for semiconductor investment due to:

• A highly skilled yet cost-competitive workforce.
• Significant investments in infrastructure upgrades.
• Favorable and transparent policies.
• Strong political commitment and leadership.

Vietnam has taken decisive actions, including:

1. Establishing the National Steering Committee for Semiconductor Industry Development, led by the Prime Minister.
2. Preparing essential infrastructure:
   • Implementing workforce development and semiconductor industry strategies.
   • Drafting a Government Decree on an Investment Support Fund with breakthrough incentives for semiconductor firms.
   • Enhancing industrial infrastructure and clean land availability.
   • Accelerating major transport projects for regional and international connectivity.
3. Facilitating investment procedures through a dedicated task force and streamlined processes for semiconductor projects in high-tech and economic zones.