Build Nests to Welcome the "Eagles"

Opportunities and advantages are real, but in the current fiercely competitive landscape for attracting foreign investment, Vietnam must make efforts to build nests to welcome the "eagles." Moreover, it needs to figure out how to make the "eagles" come to Vietnam, build nests, and take root...

"Holding gold and letting it fall."

In early November 2023, the Vietnamese media was abuzz with news that Intel had "shelved" its plan to invest in expanding chip production in Vietnam. Although this information was not later confirmed by Intel Vietnam, it could be a true story. About two years ago, Intel had planned to invest in Phase II in Vietnam, with a scale of up to billions of USD. However, recently, this project has not been mentioned.

Instead, the world's leading chip manufacturer announced an investment of over 30 billion euros (33 billion USD) in Germany as part of its expansion plan in Europe. At the same time, Intel disclosed plans to invest in a $4.6 billion chip factory in Poland. Both Germany and Poland seem ready to provide significant support to Intel, including financial assistance.

Therefore, although Reuters' sources claim that Intel canceled its expansion plan in Vietnam due to concerns about the stability of the power supply and administrative procedures, experts believe it may be related to commitments of support from partners amid the global minimum corporate tax applied in some countries since 2024. Meanwhile, Vietnam has not yet made specific commitments to support investment, although recent positive information indicates that the National Assembly has agreed to participate in the global minimum tax "playground" and start applying the Standardized Minimum Domestic Tax Mechanism from 2024. Additionally, they will study measures to issue additional support for investors.

Not only Intel's project, but there have also been billion-dollar opportunities that Vietnam has missed. Two years ago, the Austrian investor AT&S came to Vietnam to explore investment opportunities for a 1.6 billion euro semiconductor project. The opportunity was significant, and AT&S discussed the development of this project with local authorities. However, in the end, the investor decided to choose Malaysia, citing the reason that Vietnam lacked high-quality labor.

"Thought we had gold in our hands, but in the end, we let it fall." Professor-Ph.D. Nguyen Mai, Chairman of the Foreign Investment Business Association, has repeatedly expressed regret to Investment Newspaper reporters about the missed opportunities in Vietnam. One of them was in 1995 when the financial crisis erupted in Asia, the Thai baht depreciated, and investors withdrew capital massively from Thailand, causing turmoil in the region. Ideally, investment capital could have flowed strongly into Vietnam, but it did not happen.

"The mistake at that time was that we revised the Foreign Investment Law because we thought we had given too many incentives to this area and needed to tighten it. We thought that if we didn't tighten the law, when Thailand, Malaysia, etc., were in crisis, people would come to Vietnam. But then, we set our house on fire first," Professor-Ph.D. Nguyen Mai said.

The global minimum tax is a new "game," rendering all advantages in corporate income tax for the "eagles" ineffective. Green growth, sustainable development, are irreversible trends, but without institutions and policies, large projects cannot be encouraged. Issues related to electricity, water, land, infrastructure, labor, supporting industries, etc., are still mentioned by investors and remain weaknesses, sometimes forcing investors to "lift and put down."

"Investors don't come on their own. If we don't continue to reform and have superior and competitive institutional policies, ready to prepare all necessary conditions, we may miss our opportunities," Minister of Planning and Investment Nguyen Chi Dung said.

Don't let investors get tired

In a meeting with a delegation of semiconductor companies from the United States, Minister Nguyen Chi Dung told investors: "Investors, don't get tired. Intel, don't go anywhere, get tired. Whatever investors need, please propose, we are ready to respond."

A humorous but meaningful statement about Vietnam's readiness to welcome strategic opportunities ahead. However, readiness alone is not enough.

Not to mention other industries, a very notable piece of information is that despite the application of many advanced technologies recently, semiconductor production consumes massive amounts of electricity and water.

For example, an Intel plant in Arizona (USA) used 41 million liters of water per day, or the TSMC Group in 2021 used an amount of electricity accounting for 6% of the entire territory of Taiwan.

High-tech labor is also a significant issue. Moreover, according to John Neuffer, President of the Semiconductor Industry Association of the United States, to develop the semiconductor industry, Vietnam needs to formulate a development strategy and have encouraging policies, including tax incentives.

"It is also necessary to determine whether Vietnam will develop in design, manufacturing, or packaging and testing. Where will you place the center of the industry?". This question from John Neuffer is also a question that Vietnam needs to answer.

Can Vietnam meet these requirements? Sharing about Vietnam's readiness, Minister Nguyen Chi Dung said that Vietnam had passed the Power Planning VIII and was also investing in infrastructure, including transportation infrastructure, airports, seaports, to meet the needs of investors.

Currently, the development strategy of the semiconductor industry is being entrusted to the Ministry of Information and Communications by the Vietnamese government. The Ministry of Planning and Investment is also building a plan to train 50,000 personnel in the semiconductor industry by 2030 and is working to turn these efforts into reality. A decree establishing a support fund for investment in some high-tech projects, including projects in the semiconductor industry, is actively being developed and is expected to be issued in mid-2024...

But if Vietnam doesn't want investors to "get tired," perhaps it needs to be even more "quick." Because between "planning," "plans," and "reality" is a considerable gap.

Billionaire Jensen Huang of Nvidia is indeed very fond of Vietnam and highly appreciates the opportunities here, but in his recent visit to Southeast Asia, he not only came to Vietnam but also visited three other countries. Similarly, AT&S more than two years ago not only came to Vietnam but also visited Malaysia and other countries in the region. Some come and return, some come and go, all depending on Vietnam's policy response.

When bidding farewell to the National Innovation Center (NIC), billionaire Huang Jensen said: "This trip will surely open up future trips. I will return to Vietnam, returning to Nvidia's second homeland." He said this amidst enthusiastic applause from Vietnamese businesses and delegates present in the room.

But the problem is how to make this statement not just a "diplomatic" phrase.

Joining hands with the eagles

Truong Gia Binh, Chairman of FPT Corporation, represents the first generation of Vietnamese entrepreneurs. He is very sensitive and timely. Therefore, recently, seeing him continuously present at important meetings, all for a very big purpose, which is to connect business and seek investment opportunities in the semiconductor, AI sectors...

If for the Japanese, semiconductors are like rice; for the Koreans, semiconductors are likened to oil; then for FPT, semiconductors are considered the lifeblood. Understanding the critical role of semiconductors, AI, knowing that whoever masters AI and semiconductors can lead the technology game, FPT has determined that this will be the central direction in the coming time.

Therefore, recently, FPT has strategically collaborated with Landing AI, a leading computer vision and AI software company in the United States, continuously acquired stakes in US technology companies such as Cardinal Peak, Intertec International, collaborated with Japanese enterprises, opened additional semiconductor training sectors, and directly established a semiconductor company. As of now, FPT's source chip products have moved from the research and development stage to mass production. FPT has received orders for 70 million chips worldwide by 2025.

"AI, semiconductors, electronics are among the key factors for Vietnam to catch up with advanced countries in the world," Truong Gia Binh said, adding that he hopes to accompany Nvidia and other businesses, making Vietnam a global talent attraction hub for AI and semiconductors to contribute to developing the semiconductor and AI ecosystem, promoting startups, designing, and developing supercomputers.

Binh is not the only one with such aspirations. In the game of Industry 4.0, Momo, VNG... are also making great efforts. Recently, Viettel has also signed a cooperation agreement with Nvidia...

The Chairman of the Taiwan Investment Promotion Association, during his recent working trip to Vietnam, shared that he saw the "shadow" of Taiwan's leading semiconductor manufacturers in FPT. Their companies, many years ago, also started with semiconductors like FPT now...

A very different story from the 35-year journey of attracting foreign investment over the past, when not many Vietnamese businesses could participate in the global game, be present in their global supply chains. Samsung, until now, remains the most outstanding investor in supporting and connecting Vietnamese businesses to their global supply chain.

Choi Joo Ho, General Director of Samsung Vietnam, stated that to date, the number of level 1 and level 2 suppliers in Vietnam in Samsung's global supply chain has increased tenfold, from 25 businesses in 2014 to 257 businesses by the end of 2022.

An excellent effort, but not enough. That is why, when assessing the quality of foreign direct investment, many experts still mention an inherent weakness regarding the ripple effects with the Vietnamese economy, the loose connection of foreign direct investment with the domestic economy...

In the journey ahead, attracting and keeping the eagles is not enough. How to make them come and stay, build nests, take root, and together with the domestic region, accelerate Vietnam's development and realize the nation's prosperity aspirations. Only then will Vietnam truly succeed in foreign direct investment cooperation.

Source: Báo ??u T? Online (Dec, 2023)