VIETNAM - FOREIGN DIRECT INVESTMENT - THE MOST INVESTOR FRIENDLY COUNTRY IN ASIA – The Hanoi Times interviewing Dr. Oliver Massmann

1. VIETNAM - FOREIGN DIRECT INVESTMENT - THE MOST INVESTOR FRIENDLY
COUNTRY IN ASIA – The Hanoi Times interviewing Dr. Oliver Massmann
1. What do you think about recent rumors that factories of foreign corporations intend to move
their production from HCMC to other countries due to the impact of Covid-19?
In 2020, thanks to its outstanding Covid-19 prevention, Vietnam became one of the most
attractive destinations for foreign investors looking to move its production out of pandemic-
ridden China. Coupled with the enforcement of the EVFTA, Vietnam was set to be the new
manufacturing hub of South East Asia. However, since May 2021, the Covid-19 situation in
Vietnam, especially Ho Chi Minh City, took a rapid U-turn that led to nationwide lockdown for
4 months. Factories that wished to continue production must have their employee work and live
onsite, while office workers worked from home mostly. Other issues include shortage in
material supply, contact restriction between enterprises and customers, expats unable to enter
Vietnam,… With the sudden disruption to operation and increased costs to ensure workers’
safety and needs onsite, enterprises found themselves having to find a more efficient working
way. Some started transferring part of their orders to China, some suspended their process from
moving from China to Vietnam and some are looking at alternative countries like Philippines.
2. In your opinion, what major factors will likely cause these corporations' move?
In a survey of foreign enterprises in Vietnam, to return to operation, 51% of businesses said
they need at least 6 months to return to normal operations. 62% of businesses said they would
stop operating if the situation did not improve in the next 12 months. 65% of them will stop
working immediately if in the next 3 months the situation has not improved.
So the most important factors that will cause these corporations’ move in the near future is if
the Covid-19 situation in Vietnam does not become well-controlled soon. The government
should let foreign businesses clearly see the anti-epidemic plans and measures in each phase,
as it can greatly support the business's plan.
3. What factors make the remaining large brands like Néstle, Samsung, or Tetra Pak, LG
continue to invest in Vietnam?
First of all, it is not easy to immediately move a production to another country. Companies may
look to other alternative destinations but will keep an eye on the existing location to see if there’re
any considerable new improvements. Second, the Covid-19 situation in Vietnam has greatly
improved with most of the population got at least the first jab of vaccination. Third, the
Government has been issuing favourable policies on tax and fees for businesses suffering from
the consequence of the corona virus pandemic. It is aimed that by the end of 2021, at least 01
million businesses will have access to favourable credit policies, reduction or termination of
payment of tax, land fees as well as electricity, water, telecommunication charges.
For example, the latest draft of the Ministry of Planning and Investment on this matter covered
the following points to support to cut costs, remove difficulties in cash flow for businesses:
_ Propose policies suspending or reducing the social insurance premiums in 2021 for
businesses until June 2022.
_ Develop a plan to support air transport enterprises, and report to the Prime Minister in
September 2021.
– Requesting shipping companies to publicly and transparently list shipping rates to eliminate
unreasonable increase in freight rates that lead to cost burden for enterprises
_ Reduce of electricity prices for goods warehouses of logistics and processing enterprises in

2. the agriculture, forestry, fishery and a number of commodity industries with export turnover
of over USD 1 billion USD. Continue to reduce electricity prices for tourist accommodation
establishments.
– Expeditiously implement the issued policies on relaxation and reduction of taxes, fees,
charges and land rents; implement preferential tax policies for imported goods to finance
COVID-19 prevention and control after being approved by the Government.
– Extend the deadline for paying excise tax on automobiles manufactured or assembled in
Vietnam. Continue to reduce registration fees for domestically manufactured or assembled
cars for an additional period of time in line with the COVID-19 pandemic.
_ Research to allow travel businesses to temporarily withdraw deposits for domestic and
international travel and tourism services; reduce deposit withdrawal settlement time from 60
days to 30 days; continue to extend the reduction of the license fee for travel service business
and issue tourist guide cards until the end of 2021.
_ Continue to administer monetary policy to control inflation, contributing to stabilizing the
macro-economy; encourage credit institutions to continue reducing lending interest rates for
existing loans and new loans to support production and business.
_ Supplement policies on debt rescheduling, exemption and reduction of interest and fees,
keeping the same debt group for customers affected by the Covid-19 epidemic
_ Research and consider the exemption of trade union fees for members of businesses
affected by the COVID-19 pandemic in 2021 and 2022
4. What production shift scenarios do you predict may happen in the near future?
If Vietnam can effectively control the corona-virus pandemic in the next 6 months, I believe
Vietnam will regain its position as one of the most ideal investment locations in South East
Asia.
5. What should the Vietnamese government do to make production and business of foreign
corporations stable?
The government must always listen to enterprises’ difficulties and guide them on how to solve
it. It is imperative to reopen the economy as soon as possible while ensuring that businesses are
conducted safely to prevent the spread of Covid-19. Vietnam has started to apply vaccination
cards that allows people to move freely after they have had 2 vaccine injections. Policies that
assist foreign enterprises to overcome issues caused by the pandemic as well as policies that
assist them to reopen operation and achieve target growth are always welcome.
***
For more information on the above, please do not hesitate to contact the author Dr. Oliver
Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General
Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam
Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of
the NATIONAL ASSEMBLY OF VIETNAM.