Vietnam expects high-quality FDI inflows after CPTPP ratification


Commitments on investment and services in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will lure more quality foreign investment inflows to Vietnam.


According to a government report conducted by the Ministry of Planning and Investment (MPI), the CPTPP, which was approved by the National Assembly on November 12 and is due to come into effect on December 30 this year, will greatly benefit Vietnam as an attractive investment destination.

“In terms of investment attraction, CPTPP commitments on services and investment will help Vietnam improve its investment climate and attract more foreign direct investment (FDI),” the report states.

Under the MPI’s statistics, as of October 20, CPTPP nations registered over US$120 billion of FDI in Vietnam, accounting for 35.7 percent of the country’s total registered FDI, with Australia (US$1.86 billion), Canada (US$5 billion), Chile (US$15,000), Japan (US$56.2 billion), Malaysia (US$12.5 billion), Mexico (US$58,000), New Zealand (US$86.23 million), and Singapore (US$46.22 billion).

The CPTPP will create favorable conditions for Vietnam to attract investment capital from other member countries, especially those countries that do not have FTA agreements with Vietnam, such as Canada and Mexico, experts said, explaining that this agreement will promote trade cooperation, in which trade is associated with investment.

According to Kenneth Atkinson, executive chairman of Grant Thornton, the CPTPP will surely enhance export opportunities to markets such as Japan, Australia and Canada, particularly in the textile, footwear and electronic goods industries through the tariff cut commitments under the deal.

These enhanced opportunities should also help lure more foreign direct investment into these sectors, as well as accelerating the shift of manufacturing investments from China to Vietnam, Atkinson said.

Besides, Kevin Hawkins, co-executive partner of ZICO Law Vietnam, said he expected to see an increase in investment activity because, not only were 90 percent of the trade barriers removed under the deal, but also because provisions on intellectual property protection, e-commerce regulation, investment protection and investor-state dispute settlements were agreed by member countries.

“With clearer rules and guidelines between the CPTPP members in place, we can expect foreign investors to have more confidence when deciding to invest in member countries, including Vietnam,” Hawkins said.

Moreover, experts said that once the plans to invite Thailand, Korea and the UK join the CPTPP successfully, the opportunities for trade and investment cooperation in the region will be even greater. That will bring more benefits to Vietnam.

Priority policy

According to Nguyen Anh Duong from the Central Institute for Economic Management, the CPTPP will boost investment flows in Vietnam, but there is still a question of how the country takes advantage of the benefits from the capital inflow to develop the domestic business community.

“We do not want to see a scenario that the country attracts more investment and achieves an increase of exports, but local firms only earn a small share of the profits. As a result, Vietnam should select appropriate partners and focus on sectors with potential and advantages,” Duong said.

Vietnam has also planned to give top priority to high-quality FDI inflow in a move to make the capital source a spillover effect on the domestic sector.

MPI Minister Nguyen Chi Dung affirmed that Vietnam will not attract FDI at all cost. Rather, it will facilitate projects based on high technology, source technology, and a high added value.

It will also seek to lure large projects of transnational corporations, which are strong enough to promote the development of the domestic economic sector and of support industries by connecting FDI enterprises with domestic ones, Dung said, adding that this requires consistent cooperation between relevant authorities and localities.


Photo: VAM