BritCham Chairman: Viet Nam does excellent job in stabilizing macro-economy

In a recent interview with the VGP, Kenneth Atkinson spoke highly of the proactive and decisive leadership of the Government and the Prime Minister, in 2022.

The economy has been adversely impacted by the long-term effects of the COVID-19 pandemic and facing the growing risks of a global economic recession, created by high inflation and rapidly rising interest rates in many of our major export markets.

Viet Nam was the first country in ASEAN to reopen its borders in March 2022, which at the time was a very bold decision and one that was soon followed by other countries who had been pursuing a no COVID policy.

The nation was able to do this because of its highly successful vaccination roll out with a high percentage of the population having 2 shots prior to the opening, which was also much appreciated by the foreign business community, added the Chairman of BritCham.

According to Kenneth Atkinson, the Government has on many occasions demonstrated that it is very pro- business and is constantly trying to improve the administrative and regulatory environment.

Furthermore, the Government has assisted sectors that have been badly hit by COVID-19, he said, adding that this has manifested itself in the recently announced reduction of VAT to 8 percent in 2023, and reduction or waiving of land use fees, for some sectors, amongst other actions.

"The government was quick to establish three working groups, focusing on optimizing credit liquidity, assisting the real estate as well as corporate bonds and promoting new export markets", he noted. 

Viet Nam, UK bolster economic ties across all sectors

Regarding the operation of British enterprises in Viet Nam, Kenneth Atkinson said that the United Kingdom (UK) was one of the early investors in Viet Nam, with supermajor oil and gas companies BP and Shell, followed by several of the professional service firms including Price Waterhouse, Ernst and Young, Grant Thornton, and KPMG.

Banks and insurance followed with HSBC and SCB re-establishing their presence in the country as well as Prudential, which had their most successful business launch globally when they opened for business in Viet Nam, and later Dragon Capital and Vinacapital.  

In most cases these organizations have contributed to the training of employees and assisting them gain international professional qualifications and raising ethical standards.

One of the greatest contributions has been by Astra Zeneca and its contribution to helping with the vaccination of a large percentage of the population, which enabled the early opening of borders by the Vietnamese Government.

Another major contribution of UK business has been in the education sector with numerous UK educational institutions establishing in the local market. There are currently over 11,000 Vietnamese students studying in the UK.

Since late 1990's, the investment has continued in many sectors, including insurance, manufacturing and pharmaceuticals.

Currently, the UK has ranked as the largest European investor in Viet Nam with the total foreign direct investment (FDI) capital worth over US$11 billion at the end of 2022.

Despite challenges, British enterprises operating in Viet Nam are supported by a very strong Viet Nam-UK Strategic Partnership and the Joint Economic and Trade Committee where issues can be raised and taken into account by the law and policy makers.

In addition, many UK companies have been represented in the Viet Nam Business Forum (VBF) working groups. This year BritCham holds the co-chair role at the forum. The VBF has contributed significantly to the development of many sectors of the economy including banking, power and energy, taxation, etc.

Recommendations for Viet Nam to lure more foreign investment

Although foreign investment as well as foreign trade has slowed, the Chairman of BritCham expressed his belief that this is a temporary phenomenon and the upward trend will soon return.

However, it is a signal and an opportunity for the Government to address some of the issues causing challenges to foreign investors, which will also help in attracting new investment, including the finalization of the Power Development Plan 8.

He recommended reducing work permit timelines and further simplifying visa application processing steps and the Labor Code to facilitate work permit procedures for expats in Viet Nam. This will allow foreign enterprises to attract crucial foreign talents to the country.

The Government should work together with foreign businesses to collectively study the impact of the Global Minimum Tax and the impact on the interests of investors and the business environment in Viet Nam.

Such a dialogue will allow the development of practical, effective and timely solutions to ensure investment, retain benefits for businesses in case tax incentives are reduced or canceled due to the impact of the Global Minimum Tax, he suggested.

The growth of the digital economy in Viet Nam requires further development of digital infrastructure and services such as cloud services and data centers, he said, recommending Viet Nam harmonize local standards with international ones to attract experienced foreign investors in this sector./.