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Is Vietnam ready to become a hi-tech manufacturing country?

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Owning advantages of stable political environment, cheap labor and attractive preferential policies, Vietnam has great potential to become global hi-tech manufacturing hub? But do we really get ready?

Over 30 years of opening up to international integration, the inflows of hi-tech FDI have gained significant increase with the presence of hi-tech giants like Samsung, Intel, Foxconn, Bosch, strengthening Vietnam’s recognition on the world technology map.

Owning advantages of stable political environment, cheap labor and attractive preferential policies, Vietnam has great potential to become global hi-tech manufacturing hub? But do we really get ready?

On August 25, Long Hau Corporation in cooperation with German Business Association (GBA) organized a webinar titled “Is Vietnam a Hi-tech Manufacturing Go-to Destination?”.

The webinar was joined by Ms. Huynh Lien Phuong, Director of Da Nang Investment Promotion Agency and Bosch Vietnam and Mr. Guru Mallikarjuna, Managing Director of Bosch Vietnam as guest speakers, sharing an overview of the high-tech manufacturing in Vietnam, the opportunities and challenges of investors in this field.

Opportunities for Vietnam

High technology is considered to be an attractive field because of good incentives like tax exemption and reduction. Moreovers, Vietnam has a golden opportunity to capitalize on the European Union-Vietnam Free Trade Agreement (EVFTA) and attract FDI from EU firms. EVFTA will strongly promote the industrial and export sectors in Vietnam through the removal tariff on goods.

In addtion, manufacturing is shifting Southeast Asian region, with Vietnam featuring prominently on investors’ radar, in order to limit risks caused by the ongoing US-China trade tensions.

We had experience and preparation

Commenting on if Vietnam is ready to become a hi-tech manufacturing hub, Ms. Huynh Lien Phuong said: “We have had experience and preparation for more than 30 years of opening up to attract FDI. First, the labor force has much improved in skills and ability to adapt to technology compared to the previous time.

Second, we have also been developing industrial parks, hi-tech parks and economic zones with complete infrastructure and ready clean land for manufacturing.”

For example, there are 6 industrial parks in Da Nang: Hoa Khanh, Da Nang, Lien Chieu, Expanded Hoa Khanh, Hoa Cam and Da Nang Seafood Service. Currently, Da Nang Hi-Tech Park and Industrial Zones Authority is choosing investors for infrastructure development of 3 industrial zones (Phase 2 of Hoa Cam IP, Hoa Nhon IP and Hoa Ninh IP).

When these 3 new IPs come into operation, plus the conversion of the auxiliary zone in the Da Nang hi-tech park into the supporting industrial park, there will be 10 IPs with a total area of about 2,202ha to call for investment.

khu cong nghe cao da nang
Da Nang Hi-tech Park

There are still challenges

From the investor's perspective, Mr. Guru Mallikarjuna emphasized that the labor skills and productivity need to be further strengthened.

“It can’t be denied that Vietnam infrastruction, policies and especially human resources have gained much improvement. However, I think labor productivity is the key factor that Vietnam must focus on to improve competitiveness in attracting investors compared with other countries.

In my opinion, the most important factor that I’m looking for is the labor productivity. It’s reflected by the quality of labor force, how fast they can adapt the technology and machine.”

At the same time, many new investors raise concerns about the safety of their investments, as well as find it difficult to proceed investment and tax procedures. Vietnam needs to find solutions to simplify procedures and improve transparency of the investment environment.

“As a foreign investor in Vietnam, I really appreciate that the Government is always listening to the investors and trying to adopt our feedbacks into the policies and guidelines. Not everything is available, building systems is an evolving process, so we are learning together”, emphasized Mr. Guru Mallikarjuna.

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