Hanoi (VNA) - Vietnam has yet to lose its advantage as an attractivedestination for foreign investment flows, although in the short term, investorsare taking a careful consideration before making their decision, according to LecturerNguyen Xuan Thanh from the Fulbright School of Public Policy and Management.

In addition to a common trend of decrease over the globe,unnecessary procedures, tax incentives and low licensing are making investors hesitate. However, in the long term, Vietnam remains a country withvarious advantages in investment attraction, Thanh stressed.

Sharing the same view, Michael Kokalari, chief economist atinvestment fund VinaCapital, said that Vietnam will continue to be a primedestination for FDI, particularly from multinationals looking to produce exports and seeking an alternative and/or additional manufacturing base toChina, for the foreseeable future.

According to him, the new global corporate minimum tax (GMT)is unlikely to impede FDI inflows to Vietnam, given the fact that tax incentivesare not the primary attraction for setting up a factory in the country

In 2021, over 100 countries, including Vietnam, agreed to theOrganisation for Economic Cooperation and Development (OECD)’s proposal for theGMT that will impose a 15% minimum corporate tax rate on income for companieswith consolidated incomes above circa 850 million USD starting from 2023. Theimplementation of this agreement was subsequently delayed to 2024.

Some observers have also noted that planned FDI intoMalaysia and Indonesia surged during the last two years, while Vietnam’sregistered FDI was essentially flat. However, investments into Malaysia and Indonesiawere largely channelled into the production of goods Vietnam does not make,including electric vehicle batteries.

Kokalari said Vietnam had attracted far more than its “fair”share of FDI since the US-China trade tension emerged in 2018.

Theeconomist also mentioned Tim Cook’s visit to India in April, which spawned aplethora of articles on the intentions of Apple and others to build newfactories in the country. But it is important to note that most products of those factories will be sold in the Indian market. In short, new investmentsto India are not being motivated by the “China 1” investment strategy that hasdriven FDI inflow into Vietnam over the last decade, particularly at anaccelerated pace since the start of the US-China trade tension.

“Wedo not see India threatening Vietnam’s FDI inflow and continue to believe FDIis likely to remain one of Vietnam’s key growth drivers for years to come. Thecurrent wave of new FDI announcements in India should not be viewed as takinginvestment away from Vietnam,” Kokalari stressed.

Lastmonth, Apple supplier Quanta Computer signed an agreement with the People’sCommittee of the northern province of Nam Dinh on developing a large-scalecomputer factory at My Thuan Industrial Park.

InFebruary, Nam Dinh’s neighbouring province of Thai Binh also granted an investmentlicense to a 260-million-USD factory of Compal, another partner of Apple.

Meanwhile,the US multinational technology company’s leading partner, Foxconn, is alsoplanning to build a project in the central province of Nghe An, after successesof its projects in northern Bac Giang and Bac Ninh provinces./.