The year 2023 marks the 50th anniversary of the establishment of diplomatic relations between Viet Nam and Australia (February 26, 1973 - February 26, 2023). The relationship between the two countries has blossomed and expanded in many fields. Especially the two countries' relations also comprehensively develop by officially upgrading the relationship between the two countries to a Strategic Partnership in March 2018.
Despite establishing long-term diplomatic relations and developing into a strategic partner, Australia's FDI into Vietnam is still limited.
Despite having spent half a century of cooperation, the number of FDI projects in Viet Nam is still quite limited. In fact, Australia is among the top 20 countries attracting the most foreign investment (FDI) in the world, but Australia's FDI in Vietnam in recent years has been quite low. The countries that Australia invests a lot are the United States, the United Kingdom, Japan, EU countries, New Zealand, etc. ASEAN countries in general and Viet Nam in particular account for a small proportion of Australia's outward investment.
Figures from the Foreign Investment Department, Ministry of Planning and Investment show that, until December 20, 2022, Australia has 583 investment projects in Vietnam with a capital of 1.98 billion USD. Thus, Australia's FDI only accounts for 1.59% of total projects with a very small proportion of capital, only about 0.45% of total FDI, despite being ranked 20th in terms of investment value out of a total of 139 countries investing in Viet Nam. The amount of new capital is only equivalent to the adjusted capital, while with all other FDI, the amount of new capital is always 2-3 times the adjusted capital, which is also a feature of FDI from Australia poured into projects in Viet Nam.
Interflour Group project (Australian investor) operates a flour and barley mill for bread and beer production in Viet Nam (Internet photo)
Education is the area that attracts the most Australian investors to invest in Viet Nam according to Auscham ASEAN's Business Survey 2021. Followed by Transportation - hotel - entertainment, professional services and industry - manufacturing, agriculture and other industries. In terms of capital structure, nearly half of Australia's total FDI into Vietnam is for the processing and manufacturing industry; the remaining allocation is smaller for accommodation and catering services; construction, real estate; agriculture, forestry and fisheries. Despite accounting for a large number of projects, Australia's FDI for education in Vietnam only accounts for less than 5%.
Australia's FDI structure in Vietnam by industry (Source: Australia Global Alumni and Aus4Innovation)
Currently, Viet Nam and Australia have 3 common FTAs, including 2 new generation FTAs, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Partnership Agreement (RCEP). with many significant commitments of Vietnam for Australian investors. Both Agreements contain chapters on investment. The investment chapters also follow the best practices of new generation FTAs, while providing a strong legal foundation to create more opportunities for Australian investors. Most importantly, those platforms and practices are being rolled out. Economic experts also believe that the synergistic impact of these 3 FTAs and Vietnam's 12 other FTAs will open up significant opportunities to attract Australian FDI enterprises to invest and do business in Vietnam.
These Free Trade Agreements are expected to open up significant opportunities to attract Australian FDI enterprises to invest and develop more strongly in Vietnam. In addition, ANZ Bank and Commonwealth Bank of Australia have both established presence in Vietnam to provide corporate banking services.
The favorable factors of Viet Nam that are highly appreciated by Australian businesses are Labor resources: abundant, cheap, quality is gradually improved, dynamic, enthusiastic; The ability to control the COVID-19 epidemic: the stability of the Vietnamese Government and the people's good adherence to the principles of disease prevention; Socio-political situation: stable, no violence, war, force; Other positive factors: Favorable geographical location, good market prospect, favorable locality, geographical location, a number of cheap sources of raw materials available.
Besides the optimistic assessment, the investor from Australia said that there are 5 biggest challenges for FDI enterprises when deciding to do business in Vietnam, which are: The state of corruption and bureaucracy still exist. in; The tax system has many shortcomings; Lack of highly qualified labor resources; Law enforcement efficiency is not high and finally, there are many unfair competition acts in the market. Along with that, Australian FDI enterprises also said that administrative procedures are still quite troublesome, especially in the fields of taxes, fees and charges; environmental protection; social insurance, labor, fire protection, import and export, etc. Many Australian FDIs have difficulty in recruiting executives/financial managers and are looking for managers/supervisors, workers and resources. quality unskilled labor, meeting the high requirements of the job.
From "considering" to invest to "determining" to invest
Explaining why Australia's investment in Viet Nam is still cautious, Mr. Simon Pugh, Chairman of the Australian Chamber of Commerce in Viet Nam, said that many Australian businesses still lack information about Viet Nam. Therefore, it is necessary to promote investment from Australia into Viet Nam through a more comprehensive approach between the governments of the two countries and the private sector, such as introducing investment opportunities in Vietnam, investment marketing. in Viet Nam.
In addition, Viet Nam needs to comprehensively reform the public sector, regularly review domestic laws and regulations, fully implement international commitments on investment, and create a fair and transparent business environment for foreign investors. Foreign investors include Australian investors.
What should Da Nang do?
As of December 2022, Australia has 33 projects with a total registered capital of 15.76 million USD. The projects are all investment projects outside the Hi-Tech Park and Industrial Parks, focusing on the following fields: education and training; consulting services in the fields; manufacturing equipment and software with the main form of investment is 100% foreign capital.
Da Nang city needs to promote the use of local signed cooperation to promote the promotion of the environment and investment opportunities to agencies, organizations, businesses and investors in Australia. These will be reliable bridges for the city to promote its image and call for investment. In addition to the localities with cooperative relationships in Australia, Da Nang needs to actively work with the Australian Embassy and Consulate General, the Australian Chamber of Commerce (AusCham) and other cooperative organizations to organize the event. business connection Da Nang - Australia in the near future. Areas in line with the development orientation of Da Nang city, which can be targeted to attract investors from Australia are information technology, education, real estate tourism and supporting industries. In the above areas, Da Nang needs to identify major Australian investors to approach directly such as BHP Group, Origin Energy, SunCorp, Tresury Wine Estates, Stockland, etc.
Standing Vice Chairman of Ho Chi Minh City People's Committee (right) receives Ms. Sarah Hooper, the new Consul General of Australia in Ho Chi Minh City in 2022 (Source: Da Nang Newspaper)
Specifically, the People's Committee of Da Nang City has signed cooperation agreements with 04 states and cities in Australia, including: Newcastle city (New South Wales state) in the field of information exchange on cooperation and promotion opportunities. investment, trade, tourism, education, science and technology; Queensland on information exchange on cooperation opportunities, investment promotion, trade, tourism, education, science and technology; South Australia in the field of education; and finally Gold Coast city (Queensland) in the fields of: education and training, healthcare, tourism, trade and investment, disaster management, maritime, information technology and recycled energy.
As in 2022, in order to promote the development of the field of artificial intelligence as well as introduce investment opportunities in this field in Da Nang city, Da Nang Investment Promotion Agency coordinated with the Commonwealth Scientific and Technological Research Organization (CSIRO) organized the "Artificial intelligence development in Vietnam and investment opportunities in the field of artificial intelligence in Da Nang".
Seminar on Artificial Intelligence Development in Vietnam and Investment Opportunities in Artificial Intelligence in Da Nang 2022
Hopefully in the future, thanks to aforementioned methods, Da Nang will become an attractive investment destination for investors and large Australian corporations.
