This year’s collapse of the pandemic led to reports of companies pulling out of China and moving their productions to Asia. India was hopeful and ready to welcome foreign direct investment as a result of the delinking of companies from China, however, things did not turn out as New Delhi expected.
The US military is developing cannons that can bypass Russian air defenses and strike as far as Moscow
However, the Foreign Direct Investment data published by the Department for the Promotion of Industry and Internal Trade of the Ministry of Commerce and Industry for the first quarter reveal a drop of 56% compared to 2019. Although FDI was from US $ 16,330 million for 2019, it fell. to US $ 6,562 million in 2020.
ASEAN: Stock Image
Meanwhile, Vietnam, a country in Southeast Asia, has become a hub for foreign direct investment. In the race to become an Asian tiger, Vietnam’s FDI has averaged more than 6% of GDP, which is the highest proportion in any emerging country, according to the emerging markets strategist at the US multinational financial and financial services company. Morgan Stanley investment, Ruchir Sharma, quoted in a Livemint report.
Recent economic data from the country shows an 18% increase in exports, with a 26% increase in computer / component exports and a 63% increase in machinery / accessories exports.
In recent weeks, evidence from countries like India, Indonesia and Bangladesh reveals the race to become the world’s next factory after China. To make the countries more attractive, while India and Indonesia have pushed for labor law reforms, Bangladesh is negotiating 17 preferential and free trade agreements.
No Boom, No Bang: Turkey’s S-400 Missiles Achieved Nothing: Greece
The economic success of countries like China and Singapore is partly attributed to FDI. China witnessed an increase in FDI from $ 11.15 billion in 1992 to a peak of $ 290 billion in 2013. It was from here that the higher labor cost in the country began to push back investors in Asia.
Business-friendly investment policies, industrial zones, and a large supply of young workers (60% of the population) made Vietnam an attractive destination for investors as flows to China began to decline.
Since then, the country has seen an annual growth rate of 10.4 percent and last year’s record of $ 16.12 billion, an increase of 81 percent overall.
Initially, in 2007, Vietnam had allowed state-owned companies to try to compete with foreign investors when it came to FDI. The country witnessed attacks on foreign-owned factories in 2014, which resulted in a ban on state-owned companies from competing with FDI projects.
This was a game changer for Hanoi as it also kept an eye on the inflation rate, the exchange rate and the political situation.
Former Prime Minister of Vietnam, Nguyen Tan Dung, writing for the World Economic Forum offers the pearl of wisdom on FDI that the other 9 countries of the Association of Southeast Asian Nations: Indonesia, Thailand, Singapore, Malaysia, Philippines, Brunei , Cambodia, Myanmar (Burma), Laos – take note.
Dung writes that Vietnam’s sociopolitical stability, population structure, coupled with vigorous renewal of the business and investment climate, have made the country an attractive site for FDI.
Even at the time of the COVID crisis, the country’s economy is in a good position because the government has introduced tax breaks, the delay in paying taxes and land use fees for companies, reviewing the investment law and achieving a commercial agreement with the Europeans. Union (EU).
As of July 2020; The EU has removed 85 percent of its tariffs on Vietnamese products, gradually cutting the rest over the next seven years, while FDI worth more than $ 12 billion occurred between January and April 2020.
Countries like Thailand, the Philippines, Malaysia, and Indonesia have experienced political upheavals and uncertainties in recent years, but they must understand the importance of stability in attracting FDI. Similarly, India, which has 12 times the population of Vietnam, has not been able to play its ‘population card’ well.
