Mr. Do Nhat Hoang Director General Foreign Investment Agency Ministry of Planning and Investment - Hanoi, November 12, 2020
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Mr. Do Nhat Hoang
Director General
Foreign Investment Agency
Ministry of Planning and Investment
Hanoi, November 12, 2020
Copyright © 2020 Ministry of Planning and Investment. All rights reserved. 1
CONTENT
Overview of FDI flows in Preparation of Vietnam to
Vietnam 1 receive the shifted FDI flows 3
Trends of global FDI flows shifting Which elements investor interested
(where, which sector, and how?) 2 in? 4
Copyright © 2020 Ministry of Planning and Investment. All rights reserved. 2
1. Economic in Vietnam
GDP
8.00 %
7.02 %
7.13 % 7.08 %
6.89 % 6.68 %
7.00 % 6.81 %
6.42 %
6.24 % 5.98 % 6.21 %
6.00 % 5.66 %
5.42 %
⮚ GDP in the first 9 months of 2020 increased
5.40 %
5.25 %
5.00 %
by 2.12%, and GDP in 2020 is expected to
4.00 % increase 2-3%.
⮚ GDP in 2019 is 262 billion USD, GDP in
3.00 %
2019 per capita is nearly 2,715 USD
2.00 % ⮚ Trade turnover in 2019 reached 517 billion
USD
1.00 %
0.00 %
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Vietnam’s Ministry of Planning and Investment
Copyright © 2020 Ministry of Planning and Investment. All rights reserved. 3
1.2. FDI in Vietnam
80,000 4,500
4,000
70,000
The first 10 months in 2020:
3
3,500
60,000
- Disbursement Investment: decrease 2,5% (15.8
billion USD). However, the decrease level is
3,000 gradually going down comparing to the first
50,000
months of the year.
2,500 - Total newly registered capital, adjusted capital
40,000 and capital contribution to share purchase: 23.4
2,000 billion USD.
30,000 - Export of foreign investment areas 147.9
1,500 billion USD
20,000
1,000
Positive points:
- Adjusted capital: increase 4.4% (5,7 billion USD).
10,000
- The trade surplus of the foreign-invested sector
500
makes up for the trade deficit of the domestic
sector.
0 0
Vốn đăng ký Vốn thực hiện Số dự án cấp mới
Source: Vietnam’s Ministry of Planning and Investment
Copyright © 2020 Ministry of Planning and Investment. All rights reserved.
1.2. FDI IN VIETNAM
BY SECTORS
Others
12%
Accommodations
& Restaurants
3%
Constructio Processing
n &Manufactu
4% ring
59%
Electricity
production
and
distribution…
Real Estate
15%
TRIỆU USD BY PARTNER
BY LOCATION 160,000
TRIỆU USD
140,000
136,785
250,000
193,646 120,000
200,000
100,000
150,000 80,000
68,316
60,098
60,000 54,742
100,000
47,724 40,000 33,238
37,638 34,908 32,510 31,484 24,731
50,000
20,000
0 -
TP. Hồ Chí Minh Hà Nội Bình Dương Bà Rịa - Vũng Tàu Đồng Nai Các địa phương khác Hàn Quốc Nhật Bản Singapore Đài Loan Hồng Kông Các đối tác
khác
Nguồn: Cục Đầu tư nước ngoài, Bộ KHĐT Việt Nam
Copyright © 2020 Ministry of Planning and Investment. All rights reserved. 5
II. Trends of global FDI flows shifting
Global context
▪ The trade conflict between the large economy caused international corporations and enterprises to
move production locations to avoid high tax rates.
▪ The COVID-19 pandemic and its heavy consequences caused countries and international
corporations to speed up the investment restructuring process to avoid dependence on one country
and one partner.
▪ Some developed countries such as the United States, Japan, Korea, ... have issued preferential
policies and support packages to urge companies to relocate production lines to the country or to
invest in the third country. three to diversify the supply chain.
▪ According to the forecasts of UNCTAD and OECD, global FDI inflows will decrease by 40% in the
period 2020-2021.
▪ All M&A deals on a global scale tend to decrease.
6
II. Trends of global FDI flows shifting
2. Shifting of manufacturing chains
1. M&A activity is stalled (UNCTAD forecast a 70% decrease compared to 2019).
2. Global value chain interrupted.
3. Increase the investment restructuring according to the trend of "China +1"
4. Investment shift in manufacturing and supply chain of smart technology
products.
5. Developing countries will be the places to attract the shifting foreign investment
capital.
6. According to some surveys: 67% of companies in the EU sought other sources
outside of China; 37% of the 2,600 Japanese companies intend to diversify
production in other countries; 50% of the total 160 manufacturers in the US
moved some of their operations from China to Mexico.
However, the movement of FDI flows out of China will be difficult to happen in the
short-term because China still has outstanding advantages compared to other
developing countries.
7
II. Trends of global FDI flows shifting
3. Shifting FDI flows trend of some country partners
3.1. Korea
1. Vietnam ranks 4th out of 10 countries attracting the most Korean investment.
Vietnam accounts for about 30% of total Korean FDI into ASEAN.
2. Some Korean enterprises have chosen Vietnam as a destination for investment
transfer such as: Hyosung TNS Company has implemented the project to build
ATM factory in Bac Ninh; Daewoo Bus Company is researching to transfer the
bus production line from a factory in Korea to a factory in Khai Quang
Industrial Park, Vinh Phuc.
3. Korean foreign investment in Vietnam next time: manufacturing industry,
finance, banking, insurance, energy, infrastructure, logistics, distribution, M&A,
startup ...
8
II. Trends of global FDI flows shifting
3. Shifting FDI flows trend of some country partners
3.2. Japan
1. Many Japanese enterprises have been transferring production lines from
China to other countries due to (i) the US-China trade war, Covid-19, the
pressure to diversify the supply chain.
2. Japan is still actively implementing the policy of "China + 1" and looking
for more locations outside China to diversify the current supply chain.
3. According to the JETRO Quarter I / 2020 survey: 41% plan to move to
Vietnam, 48% of Japanese enterprises said they will still stay in China.
4. Some areas of Japanese enterprises are interested in the coming time:
component production, distribution, increased use of robots, AI
application, IoT, M&A activities.
9
II. Trends of global FDI flows shifting
3. Shifting FDI flows trend of some country partners
3.3. Europe
1. Businesses will tend to study economically and politically stable countries
for business investment.
2. European businesses are expected to diversify their supply
3. Vietnam has advantages compared to other ASEAN countries when it has
signed many new generation free trade agreements such as CPTPP,
EVFTA, .... Especially, on June 8, 2020, the National Assembly passed.
Resolution approving the EVFTA and EVIPA Agreements.
10II. Trends of global FDI flows shifting
3. Shifting FDI flows trend of some country partners
3.4. Taiwan
1. In the eight months of 2020, Vietnam is the third largest investment
destination for Taiwan. Vietnam accounts for more than 30% of the total
investment capital that Taiwanese investors enter into the ASEAN region.
2. In the medium term (the next 2-3 years), Taiwan's technology groups and
supporting enterprises will still prioritize Vietnam as an investment
destination or expand investment due to the advantages of Vietnam.
3. From the end of 2019, Foxconn Group has invested in two new projects
in Bac Giang (200 million USD) and Quang Ninh (about 50 million
USD). In early 2020, Wintron, Compal, Quisda, and Pegatron groups all
expand production and invest in new ones in Vietnam.
11II. Trends of global FDI flows shifting
3. Shifting FDI flows trend of some country partners
3.5. Singapore
1. The trend of gradually shifting production out of China, building new
production and assembly facilities in ASEAN countries.
2. Singapore's investment in Vietnam in the coming time: high-quality
infrastructure and services.
3. In the eight months of 2020, Singapore is the largest investor in Vietnam
with a total investment of more than 6.5 billion USD.
4. On April 17, the Ministry of Planning and Investment cooperated with
Vietnam Embassy in Singapore + SMF (Singapore Production
Federation) to organize an online investment promotion seminar.
124. Sectors and fields with prospects to attract investment shifting flows
Food Processing Consumer goods and retails
Electronic equipment and
Automotive industry
components
E-commerce and logistics Supporting industry
Heavy industry (steel,
Textiles, leather and shoes
petroleum, chemicals)
13III. PREPARATION OF VIETNAM TO RECEIVE THE SHIFTED FDI FLOWS
1. Industry park
land fund
6. Taskforce
promoting FDI
corporation 2. Labour training
RECEIVING
SHIFTED FDI
FLOWS
5. Building legal
frame more
favourable and 3. Energy
more incentives
4. Facilitating
supporting
industry
14IV. PREPARATION OF OVERVIEW OF INDUSTRIAL LANDS IN SOME
BIG PROVINCES
VIETNAM TO RECEIVE Unit: Hectares
SHIFTED FDI FLOWS 8,000
91.5%
100.0%
88.4%
83.2% 84.4% 90.0%
7,000
80.0%
74.1
90.1% 80.0%
6,000 85.8%
70.0%
58.8%
1. Industrial Land 5,000 69.3%
60.0%
60.9%
INDUSTRIAL 260 IPs PLANNING 4,000 55.3%
59.5%
57.0%
50.0%
75,933 ha LAND 86,66 thousand hectares 3,000
40.0%
UNDER BASIC
93 IPs CONSTRUCTION 2,000
30.0%
20.0%
32,27 thousand hectares
55%
OCCUPATION
RATE OF
17 EZs ESTABLISHED
1,000
10.0%
INDUSTRIAL 65 thousand hectares - 0.0%
LAND
2 EZs PLANNING
INCLUDING INDUSTRIAL ZONES AND 27,3 thousand hectares
ECONOMIC ZONES
Đất công nghiệp
Industrial land Tỷ lệ lấp đầy rate
Occupation
Copyright © 2020 Bộ Kế hoạch và Đầu tư. All rights reserved. Cấm sao chép khi không được phépIV. PREPARATION OF VIETNAM TO RECEIVE SHIFTED FDI FLOWS
2. Trainning human resources
Cooperate between universities, colleges,
vocational training centers with Corporations,
enterprises to train according to “Orders”.
NĂM 2025 Develop a database of trained labor force in
foreign countries to connect the demands of FDI
and U.S enterprises.
2026-2030
16IV. PREPARATION OF VIETNAM TO RECEIVE SHIFTED FDI FLOWS
3. Energy
ELECTRICITY DEVELOPMENT PLANNING
CAPACITY PLANNING OPERATIONAL CAPACITY
YEAR 2020 60,000 MW 2016-2020 21,651 MW
YEAR 2025 96,500 MW 2021-2025 36,192 MW
YEAR 2030 129,500 MW
2026-2030 38,010 MW
17IV. PREPARATION OF VIETNAM TO RECEIVE SHIFTED FDI FLOWS
4. Improving investment environment
NATIONAL ASSEMBLY
APPROVED
Law on Investment in forms of
Law on Investment Law on Enterprises Public – Private Partnership
(17/6/2020) (17/6/2020) (PPP)
(18/6/2020)
⮚ NĂM 2025
Create open mechanism
⮚ Increase decentralization
⮚ Clarify and diversify forms of investment
2026-2030
⮚ Supplement investment incentives, investment
supports
18IV. PREPARATION OF VIETNAM TO RECEIVE SHIFTED FDI FLOWS
Comparison of corporate income tax in ASEAN countries
COUNTRY Corporate income tax
CAMBODIA 20%
INDONESIA 22%
LAOS 24%
MALAYSIA 24%
MYANMAR 25%
PHILIPPINES 30%
SINGAPORE 17%
THAILAND 20%
VIETNAM 20%
Source: World Bank and KPMG update 8/2020
Copyright © 2020 Ministry of Planning and Investment. All rights reserved. 19IV. PREPARATION OF VIETNAM TO RECEIVE SHIFTED FDI FLOWS
REGULATION ON INCENTIVES ON SPECIAL INCENTIVE UNDER INVESTMENT LAW
CORPORATE INCOME TAX No. 61/2020/QH14
(Investment Law 2014, Law on Corporate Income
Tax 2013 and Decree 218/2013/NĐ-CP)
(1) Duration 10% within 30 years Maximum 5% within 37,5 years
(2)Exemption Exemption maximum 6 years, reduction maximum 50% in 13
4 years exemption , 50% reduction in 9 years
Rate years
1) Investment projects have great impact on socio-economic
1) By sectors development
(3) Conditions 2) By location 2) Large-scale projects over 30,000 billion VND
3) By business scale, 6,000 billion VND capital or 3) Innovation Center, R&D Center...
more, the minimum disbursement of 6,000 4) Additional conditions for high technology, the portion of
billion VND within 3 years. Vietnamese enterprises participating in the supply chain,
rate of production value of Vietnamese enterprises.
(4) Legal bases Article 15, 16 Investment Law 2014, Corporate
Clause 4 Article 75 Investment Law No.61/2020/QH14
Income Tax Law and related Decrees
20IV. PREPARATION OF VIETNAM TO RECEIVE SHIFTED FDI FLOWS
5. Promote supporting industry
1. Ministry of Industry and Trade develops website on supporting
businesses to connect Vietnamese business with foreign market
(buyvietnam.com.vn)
2. Establish the National Innovation Center - NIC
(training, connection, technology incubator)
21
Copyright © 2020 Ministry of Planning and Investment. All rights reserved.V. PREPARATION OF VIETNAM TO RECEIVE SHIFTED FDI FLOWS
6. Working groups promote cooperation of foreign investment
HEAD OF TASK FORCE
DEPUTY PRIME MINISTER
PHAM BINHMINH
HEAD OF TASK FORCE
DEPUTY HEAD OF TASK FORCE
MINISTER OF PLANNING AND
VICE MINISTER OF PLANNING
INVESTMENT
AND INVESTMENT
NGUYEN CHI DZUNG
Ministry Ministry of Ministry
of Ministry Ministry of Ministry of
Govern Ministry Ministry Ministry Ministry of Natural of
Agricultur of Labor, War Informatio State
of of Public of Resources Science
ment Industry
e & Rural Culture, Invalids, & n& Bank of
Foreign Security Finance and Trade & &
Office Affairs Developm Environme
Sports & Social Communic Vietnam
Technolo Tourism ations
ent nt Welfare
gy
Copyright © 2020 Ministry of Planning and Investment. All rights reserved. 22V. SUPPORT OF MPI
PROVIDE INFORMATION ON LAWS AND POLICIES
CONNECT STATE AGENCIES AT DIFFERENT
LEVELS AND PROVINCES
ORGANIZE BUSINESS MATCHINGS
SUPPORT TO SOLVE DIFFICULTIES AND
ENTANGLEMENTS
23VIET NAM
Destination of success and safety
THANKS FOR YOUR ATTENTION!
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