The nation has sustainably enjoyed FDI inflows well above 4% of its GDP, being among the highest in ASEAN, the report titled ‘Vietnam at a glance: FDI—Back to the basics’ said.

As the country’s claimed advantages may now be challenged by other players that are part of the global value chain (GVC), its manufacturing ecosystem needs to evolve to the next stage to address these challenges, Vietnamese media outlets reported citing the HSBC document.

This needs proactive steps aimed at upskilling in technical fields and improving existing infrastructure to facilitate and accommodate additional FDI inflows, the document noted.

Manufacturing wages in the country are lower than those in China and other regional peers and the nation has signed several economic agreements with major trading partners. These have facilitated greater FDI, it observed.

Vietnam has a competitive position relative to its peers with a 20-per cent statutory corporate income tax rate. In addition, some firms have used lengthy tax breaks and holidays to reduce the effective rate further.

Measures such as further leveraging digitalisation to streamline trade processes, securing reliable and green energy, and facilitating goods transport through better infrastructure are factors that are likely to affect investment decisions of multinational corporations in future, the HSBC report added.

Fibre2Fashion News Desk (DS)