Vietnam is facing a loss of multi-billion-dollar investments from major companies like Intel Corp and LG Chem Ltd due to a lack of investment incentives, according to a document from Vietnam’s Ministry of Planning and Investment. Intel had planned to invest $3.3 billion in Vietnam but requested cash support, which the country did not offer, leading the company to move the project to Poland instead. Similarly, LG Chem decided to invest in Indonesia after asking Vietnam for investment cost coverage, which was also not provided.
The document highlighted that many large groups have shown interest in investing in Vietnam but ultimately decided to invest in other countries due to the lack of investment support regulations in Vietnam. This is concerning as foreign-invested companies play a significant role in Vietnam’s economy, accounting for about 70 percent of its total exports.
In addition to Intel and LG Chem, Austria-based semiconductor manufacturer AT&S also decided to invest in Malaysia after its investment support request in Vietnam was not met. Samsung was also considering moving some production to India instead of Vietnam. Despite these setbacks, Vietnam’s economic growth prospects remain positive, with Minister of Planning and Investment Nguyen Chi Dung stating that the country’s economic expansion could reach 7 percent this year.
The International Monetary Fund (IMF) has forecasted a 6 percent GDP expansion for Vietnam this year, up from 5 percent last year, making it one of Asia’s fastest-growing economies. The country is benefiting from rising exports and foreign direct investment (FDI), with FDI pledges expected to reach between $39 billion and $40 billion this year. This is an increase from the $36.6 billion in foreign direct investment recorded last year.
Overall, the lack of investment incentives in Vietnam is causing major companies to seek opportunities in other countries, potentially hindering the country’s economic growth. However, Vietnam’s economy is still expected to perform well this year, driven by improvements in the industrial and construction sectors. It will be crucial for the government to address the issue of investment support to attract and retain foreign investors in order to sustain economic growth in the long term.
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https://www.taipeitimes.com/News/biz/archives/2024/07/08/2003820475
