Delays in improving the business environment will lose the opportunity to attract foreign investment

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Mr Hong Sun, Chairman of the Korean Chamber of Commerce in Vietnam (KOCHAM).

In your opinion, in the context of the declining global market, what changes should Vietnamese enterprises make to promote exports?

Currently, the global supply chain is facing many difficulties, so it is forecasted that this year, import and export turnover between Vietnam and South Korea will be difficult to reach the target of 100 billion USD due to the influence of the global economic slowdownincreased. However,Vietnam's exports to South Korea still account for a modest proportion. For example, Vietnam has strengths in agricultural products, but these exports in Vietnam are also quite popular in Korea. Moreover, Korea is a fastidious market, so many Vietnamese products cannot meet the requirements.

Therefore, Vietnamese enterprises need to change their export strategies besides improving product quality. With agricultural products, the Korean Government is still afraid of opening the market for basic food products, but if Vietnamese businesses invest in processing products into ready-to-eat foods, fruits, dried, and frozen foodwill have the opportunity to compete and penetrate the Korean market.

Along with trade and investment, how do you comment on Vietnam's investment environment for Korean businesses today?

Vietnam is still considered an attractive destination for Korean and foreign investors due to its favourable policies and business environment. In particular, Korea has more than 30 years of experience in Vietnam, so it has become the leading investment country in Vietnam. Although in the first months of 2023, the number and value of investments from Korea into Vietnam decreased largely due to objective reasons such as the global economic slowdown, the win exchange rate, and high-interest rates…

But besides that, many investors are still concerned about issues related to Vietnam's administrative procedures. For example, some permits related to investment and construction procedures are still delayed, affecting foreign enterprises' capital disbursement plans, infrastructure provision, and ordering.... Recently, the procedures related to fire prevention and fighting licensing with new requirements caused foreign investors to invest more and have to suspend operations to wait for more time to complete the procedures. In addition, labour permits, visas for foreign business people, and temporary residenceare also inadequate, which can hinder investment progress.

Korean investors are paying much attention to investing in energy projects in Vietnam, but this activity is also being affected. Some investors are ready to invest 3-6 billion USD in energy projects.

For investors from Korea and many other national investors, time is always an important issue when investing abroad. Because when they choose an investment location, it also means planning for production, supplying goods, and arranging capital flow... so congested investment activities will greatly affect the operation plan of the investors.

Could you please tell me how Vietnam's regulatory agencies should improve the investment and trade environment?

The above issues raise requirements for improving the investment and business environment with ministries and branches of Vietnam. Because Vietnam is not the only place attracting foreign investment, many other countries in the region, even developed countries like the US, are also actively attracting foreign investment. Therefore, if Vietnam is late in amending regulations related to administrative procedures and improving the business environment, Vietnam will lose the opportunityand miss the important moment for development.

Not only that, in the coming time, Vietnam will apply the mechanisms of the global minimum tax. Although this is not a problem unique to Vietnam, if Vietnam does not actively participate, no appropriate preparation strategy will affect the activities of attracting foreign investment. Many countries have set up supportive policies to compensate for the difference when applying the global minimum tax. In Vietnam, KOCHAM also suggested that the Vietnamese Government should have a financial support mechanism for investment activities related to research and development (R&D) or high-tech products… Mechanism This not only preserves the ability to attract investment but also helps encourage investors to use this resource to reinvest in Vietnam.

Regarding trade, along with the innovations in products and strategies as I mentioned above, the Governments of Vietnam and Korea need to strengthen dialogue activities and jointly remove difficulties for businesses of the two countries to increase exports and imports and trade promotion.

Thank you Sir!