“Swiss investors are increasingly attracted to Vietnam,” expressed by Ms Florence Lomaglio, in charge of communication of Swiss Business Association in Ho Chi Minh City in an interview with Vietnam Business Forum on the occasion of 45 years of Vietnam - Switzerland diplomatic relations (1971 - 2016). Le Phuong reports.
How do you evaluate the success of Swiss projects in Vietnam in recent years?
Currently, no survey or statistics are available to assess the success of Swiss investments in Vietnam. However, from our particular position within the Swiss business community in Vietnam, the Swiss Business Association in Vietnam concludes that a vast majority of Swiss invested companies in Vietnam are satisfied with the development of their projects. We also observe that Swiss investors are increasingly attracted to Vietnam as Vietnam is offering excellent investment conditions, including attractive tax incentives, a recently reformed regulatory environment, along with a young, educated and fast-learning workforce with a strong entrepreneurial mind (benefiting from Confucian values).
What positive developments in terms of current investment climate have you seen that may help to attract investors including those from Switzerland in the foreseeable future”?
Vietnam has been doing a great job over the years at improving the investment conditions for foreigners, supporting at the same time the domestic growth.
Since 2011, Vietnam has undertaken sixteen major law reforms that have an overall significant positive impact on foreign investments. In revising in particular the investment law and enterprise law, the government has relaxed a great number of sectors that were originally restricted to foreign companies.
In addition, the various free trade agreements (FTA), either executed or in discussion, is an indubitable signal that Vietnam is strengthening its bonds with foreign markets. Although those agreements do not directly address FDI domestic conditions, it is surely a weighting factor in the foreign investment decision. Indeed, a FTA provides a favourable access to additional markets for any investors in Vietnam, foreign investors included. It should also be stressed that Vietnam benefits from a unique position in South-East Asia as the only country with such a great number of FTAs, again, either executed or in negotiation. Such an extensive network of FTAs places Vietnam in a leading position in the region for foreign market accessibility. The recently executed FTA with European Union and the currently discussed FTA with EFTA countries (i.e. Switzerland, Liechtenstein, Iceland and Norway) are of particular importance for Swiss companies.
Do you think that ASEAN Economic Community (AEC) is important for Swiss firms to do business in Vietnam? Will there be a new wave of Swiss companies into Vietnam?
We believe AEC’s effects in Vietnam have not been yet concrete enough to expect any significant impact on Swiss investments. We believe the signature of a FTA with EFTA would be a better trigger to a new Swiss wave of investment in Vietnam in the short term. However, in the long term, AEC will play an important role for Swiss companies. With Vietnam’s central location and attractive foreign investment environment, Vietnam will be surely a prime candidate as manufacturing location or regional hub for Swiss companies who seek to access all of AEC markets,
Vietnam has now a very ambitious programme for major infrastructure developments including new urban railway networks, brand new international airport along with proposed expansion of other regional airports, I wonder if Swiss companies are interested in these projects?
Swiss companies have the proper expertise, a world’s leading-edge technology and the relevant equipment for major infrastructure developments. Those companies would certainly be interested in participating in such projects. In reality, competition is fierce with participants not only from Europe and the United States, but also from various Asian countries that benefit from strong support of their governments. The other challenge is that the tender process remains opaque and is not necessarily decided on pure price/performance considerations.
According to you, in order to attract more FDI, including Swiss investors into Vietnam, what improvements should Vietnam Government do?
Governmental bureaucracy and administrative infrastructure, no doubt, have been and remain a substantial hurdle to do business in Vietnam, though to a much lesser extent today than 20 years ago. Regulations are often either unclear or contradictory and the implementation guidelines lacking, making it difficult for foreign investors to know what is permissible and what is not. The bureaucracy and administrative burden has improved. The same can be said of the experience and skills of higher ranking government officials who nowadays are mostly foreign educated. However, there is still considerable red tape and unpredictability in laws implementation that could be further improved.
Another challenge for foreign investors is the limited pool of highly skilled professionals. There are plenty of unskilled workers, but well trained professionals are more rare. The current strategy of foreign investors to counter this is to hire staff at an early stage of their career and provide a proper training including career advancement to ensure retention. The Vietnamese government ought to invest into improving both basic and high education. We believe the present education system does not foster independent and critical thinking, which is one of the shortcomings, along with the above-mentioned shortage of a higher skilled workforce.
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