VIETNAM ECONOMIC TIMES INTERVIEWING DR. OLIVER MASSMANN ON PROSPECT FOR FOREIGN INVESTMENT ATTRACTION IN 2019

1. VIETNAM ECONOMIC TIMES INTERVIEWING DR. OLIVER MASSMANN ON PROSPECT
FOR FOREIGN INVESTMENT ATTRACTION IN 2019
1. What do you forecast the prospect for FDI attraction in Vietnam in the last 6 months of 2019?
Vietnam continues to attract record foreign direct investment (FDI) in virtually all sectors. In the first five
months of the 2019, Foreign Investment Agency (FIA) shows that FDI in Vietnam has reached a four-year
high of US$16.74 billion, which demonstrates a year-on-year increase of 69.1 percent. It is expected that
FDI investment will continue to grow robustly. The only barrier is to maintain its growth with appropriate
strategy for government reforms. Its government has begun prioritizing ‘high-value’ FDI (advanced
technology and manufacturing, tourism etc) as well as adequate training for the working population to raise
the standards for specialized areas.
2. Which sectors would be the most attracted to foreign investors in Vietnam? Which
countries/territories would be the top FDI ones in Vietnam?
The industry and construction sector grows the fastest at 8 percent, followed by services at 7.44 percent and
agriculture, forestry and fishery at 2.90 percent. The industry sector grows at 7.85 percent. Accommodation
and catering services grows the fastest at 8.98 percent. Others like the financial, banking etc. peak at 8.14
percent. Real estate business grows by 4.07 percent, its highest since 2011. These would be the most
attractive sectors to foreign investors in the upcoming time.
FDI inflow from China into Vietnam has been plummeting. Investors from Singapore, Japan, South Korea
will continue as top foreign investors in Vietnam.
3. Many China-based manufacturers have moved to Vietnam due to impacts of the US-China
trade intensions. Could the trend influence Vietnam’s FDI performance? Why?
With the US-China trade war showing no signs of abating, Vietnam’s free trade agreements, cheap labor,
and young working population provide a powerful concoction for it to thrive.
The growth in FDI inflows from China into Vietnam is expected regarding the impact of the ongoing US-
China trade war with many Chinese enterprises grasping opportunities by Vietnam’s participation in many
new-generation free trade agreements. Therefore, it is necessary for Vietnam to proactively choose to attract
FDI projects with high technology content, ensuring the principle of generating high added-value for the
economy in accordance with Vietnam’s FDI attraction policy in the new period.
4. Vietnam will not attract FDI at all cost and expects high-quality FDI inflows after CPTPP
ratification. What challenges will Vietnam face when pursuing the strategy?
First, the FDI sector’s linkage with other domestic sectors remains weak and its spillover effect on
productivity remains low. Second, the attraction and transfer of technology from the FDI sector has not yet
achieved the expected results. Third, the attraction of foreign investment into a number of prioritized sectors
of the country and from transnational corporations is still limited. Fourth, a small number of FDI projects
have not yet strictly observed the laws on environmental protection, employment of foreign workers and
tax. Also, the reduction and removal of import tariffs under the deal will lead to a decrease in the state
revenue.

2. 5. From your observations, how should the Vietnamese government select appropriate partners
and focus on sectors with potential and advantages?
To maintain and develop bilateral investment and commercial relations, trade must be liberal and equal. In
terms of geographical areas, foreign investment attraction will suit the advantages, conditions, development
levels and plans of each locality and its regional linkages, ensuring economic-social-environmental
effectiveness. For sensitive areas related to national defense and security, the foreign investment attraction
will be strictly scrutinized, with national defense and security and sovereignty being primary concerns.
Vietnam will step up the diversification of foreign investment attraction from potential markets and
partners. It focuses on top developed nations and transnationals with source and advanced technologies and
modern governance expertise.
If you have any question on the above, please do not hesitate to contact Dr. Oliver Massmann under
omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam
LLC.
Thank you very much!