AmCham Vietnam Remarks
HCMC People’s Committee
Conference on Preliminary Review of Investment Working Group Operations and
Recommendations for Improving Investment Environment of HCMC in 2021
March 19, 2021
Good morning. Chairman Phong, representatives of the HCMC People’s Committee, colleagues from the business community, I am delighted to be here today to represent AmCham Vietnam.
Yesterday, I had the honor of joining Intel Vietnam for a celebration of its achievements from 2010-2020, together with former Party Secretary Dr. Nhan, Vice Chairman Duc, Thu Duc City Chairman Tung Hoang, and Saigon High Tech Park President Dr. Thi.
Intel Vietnam paved the way for development of Vietnam’s high-tech manufacturing sector when it came to Vietnam in 2006, in large part, thanks to the positive investment environment and strong support from HCMC and Central authorities. Intel Vietnam already has over $1 billion in investment, and 2700 employees. Its investment plans for nearly another almost $500 million is a testament to the positive investment environment here in HCMC and the Saigon High Tech Park, as well as Intel’s commitment to partner to drive innovation and sustainable growth in Vietnam.
U.S. technology companies and startups are eager to invest in Vietnam, as well as partner with Vietnamese companies, to drive the next generation of economic growth, including fintech, AI, and Industrial Revolution 4.0. U.S. companies are well-positioned to help build the clean energy and smart city infrastructure needed for sustainable growth. They are expanding manufacturing supply chains in Vietnam and producing high quality food, beverages, and consumer goods for Vietnamese people. They are contributing to development of a globally competitive workforce in Vietnam, as well as access to world-class innovative healthcare. And they provide legal, financial, as well as tourism and hospitality services to support investment, exports, economic growth, and quality of life. When companies already in HCMC stay and grow their business, that is the best advertising for HCMC’s investment environment.
COVID Comparative Advantage – Vietnam, including HCMC, has done an incredible job in managing the COVID pandemic. Vietnam is one of the only countries in the world that experienced positive growth in 2020, and where American companies like Intel and First Solar could operate continuously. Our members are immensely grateful and supported that effort through contributions of PPE, medical equipment, and a fully-equipped ambulance. Now, we would like to partner on Enabling a Safe Reopening for International Travel and Tourism – ensuring equitable access to vaccines for foreigners in Vietnam; expediting travel procedures for foreign residents to travel and return including streamlined testing, renewal of visas, and residence cards; and facilitating entry of foreign investors, technical experts, and as vaccinations roll out, hopefully soon, tourists. We strongly recommend Vietnam provide and facilitate a streamlined process, with shortened quarantine period, for short-term business travelers into Vietnam to consider investment opportunities, conclude deals, and sign contracts. Further, we would recommend that Vietnam, and HCMC specifically, should accelerate vaccination for Vietnamese and foreign residents living in Vietnam and consider a pilot program of granting quarantine reduction or exemption for individuals who have been properly vaccinated. This will help facilitate Vietnam’s reintegration, reopening, and recovery.
Regulatory Environment – An enabling, fair, transparent, predictable, and efficient regulatory environment that values innovation is probably THE most critical factor affecting investment. Tax policies are especially important. Retroactive determinations make other would-be investors nervous. Unexpected problems and inconsistent guidance in work permits, and management of foreign employees is also becoming a concern. Some of our members are now experiencing difficulty extending work permits from DOLISA for foreign workers who had work permits issued under the old Decree. Continued efforts to reform administrative procedures and promote e-government and digitalization of services would be most welcome. Including e-invitations. Our hard copy of an invitation to today’s event apparently got lost in the mail. We only found out from another business association.
Thu Duc City – We welcome the establishment of Thu Duc City, and the intent to create a new center for economic growth and innovation. However, we are concerned about the unintended consequences that this may create for people and organizations located in the previous Districts 2, 9 and Thu Duc. Therefore, we recommend that the city offer measures to reduce the administrative burden, by grandfathering treatment for existing enterprises and households and exempting them from having to immediately amend all relevant corporate, tax, employment, and other documents to update addresses. We would also recommend the city offer preferential tax or other investment incentives, as well as expedited and /or streamlined investment and administrative procedures to attract investment to Thu Duc City.
Physical Infrastructure – More needs to be done to develop the highways, metro, ports, airports, and energy infrastructure, as well as sewage treatment and waste management to support this vibrant city and take full advantage of its once-beautiful river and enjoy more blue-sky days. Vietnam and HCMC can’t solve the global container crisis, but more efficient port management and logistics will help. We welcome the greater transparency on land use plans and hope there will be more streamlined approval processes, as well as assistance in identifying new locations for companies that need to move or expand operations.
Digital and Financial Infrastructure– While we recognize the HCMC People’s Committee may not set these policies, a free, open, and secure digital economy is a key part of the investment environment, and essential to enabling digital transformation and IR 4.0. Further development of Vietnam’s capital markets and financial services is also important and AmCham members support efforts to support Vietnam’s development as an emerging market and HCMC as a national and regional financial center.
Social Infrastructure – People are one of Vietnam and HCMC’s most important competitive advantages. Vietnamese families sacrifice for their children’s education and Vietnam generally, and HCMC specifically, benefit from a young, tech-savvy, and entrepreneurial workforce. Yet, there is still often a skills gap, in English language, in critical thinking and soft skills, for recent university graduates. There are a limited number of factory managers. And a need for ongoing learning and skills development. Local SME’s need capacity building to enter global supply chains. AmCham member companies, including world-class educational institutions like Fulbright University Vietnam, Arizona State University, Vietnam German University and RMIT (yes, we are inclusive) are ready to partner to develop a globally competitive workforce here in HCMC.
AmCham is invested in the success of Vietnam and Ho Chi Minh City. We welcome today’s conference and look forward to strengthening our trade and investment partnership.
Our first Chairman’s Circle reception for 2021 on Wednesday, February 3, focused on 2021 U.S.-Vietnam Leadership Changes and the Impact on Your Business. The exclusive event offered senior AmCham business leaders an opportunity to obtain critical business intelligence and exchange views with a top panel of Vietnamese, regional, and U.S. economic and political experts about the likely focus of the Biden/Harris Administration and new Vietnamese Government leadership just two weeks after the U.S. inauguration and two days after conclusion of Vietnam’s 13th National Party Congress.
The event featured an all-star cast of experts, including:
Nguyen Xuan Thanh
Lecturer of Public Policy
Fulbright School of Public Policy and Management
Dr. Deborah Elms
Founder & Executive Director
Asian Trade Centre (ATC)
Nguyen Khac Giang
Co-author of “Civil Society in Vietnam: An Institutional Approach”
Senior Vice President for Asia
U.S. Chamber of Commerce
The key takeaways for the U.S.-Vietnam relationship, business climate in Vietnam, and prospects for a Free Trade Agreement (FTA) were: Continuity. Balance. Opportunity to Reset. Need to Exercise Patience. Hurry Up and Wait. Demonstrate benefits to American workers of trade and costs of loss of competitiveness if the U.S. remains on the sidelines of FTAs. Invest in Vietnamese Real Estate!
Putting it all together, our experts recognized significant continuity in Vietnam’s leadership and its continued desire to balance relations with the United States and China. Yet, there is an opportunity to reset the bilateral relationship. AmCham leaders should exercise patience as we hurry up and wait laying groundwork for a bilateral FTA or the United States joining an improved Comprehensive Progressive Trans-Pacific Partnership (CPTPP), with at least United States-Mexico-Canada Agreement (USMCA) standards, especially on labor and the environment. We need to demonstrate benefits to American workers of trade and the costs of loss of competitiveness if we stay on the sidelines of FTAs, while recognizing geopolitical security concerns may be as compelling as economic concerns in getting support for an FTA. And meanwhile, if we have any spare cash, we should invest in Vietnamese real estate, since more inbound investment is coming, especially in manufacturing, and the new Prime Minister is likely to ensure more progress on real estate and infrastructure investment.
More information about Chairman’s Circle Events
Interesting discussion on Vietnam’s venture capital and tech startup investment scene with Ms. Vy Le, Co-founder and General Partner of Do Ventures, with Capital Markets and Financial Services Committee (CMFSC) Chairman and Saigon Asset Management Chairman and CEO Louis Nguyen, held at the Sunwah Innovation Center.
The meeting covered various topics including the status of venture capital in Vietnam, what caused almost $1b in startup transactions in 2019, details behind large deals such as VN Pay, Tiki, Yeah 1, what’s hot and what’s not in 2021.
Vy spoke about her own career as an entrepreneur, beginning at age 7, launching her first tech startup at 22, and her first $50m VC fund at 33. She also noted Do Ventures’ investment strategy to focus on early-stage, pre-series A investment.
Vy highlighted the Vietnamese government’s efforts to promote tech innovation, including recent participation of senior government members at technology events, and at its National Innovation Center (NIC) outside Hanoi. There are high-tech parks and incubators in HCMC, including SIHUB, Shinhan Future Lab, and Block71, but none of them is yet at NIC’s scale.
She also discussed the influx of investors from Korea, Singapore, and Japan. She noted significant potential for more U.S. venture capital investments in Vietnamese tech startups and expressed the hope that post-COVID, more deals would be realized, even if IPOs would not be a likely exit strategy.
She said key hot sectors for 2021 are the “new normal businesses” such as the revival of B2B, online education, healthcare, and financial services.
What’s not so hot now for early stage investors are digital payment and logistics. The payment option sector is pretty well-developed already and logistics is a tough market to enter without significant capital.
While she thought it was late for early stage investors to enter the e-commerce space in Vietnam, she noted there was still plenty of potential for growth, with only 5% of Vietnamese retail taking place online, compared to more than 20% in the United States and over 30% in China.
She stated that Do Ventures has incorporated Environment, Social, and Government criteria into its investment approach, as well as KPIs for its investors. Vy reflected that among her highest returns were from two female-led companies, Elsa and MindX. She commented that, in Vietnam as well as generally, there is still a scarcity of women in tech.
Thanksgiving is just around the corner. This year, Thanksgiving falls on the 26th of November. How are you going to celebrate this traditional holiday? Are you still wondering about where to dine? What delivery to take? Just set your mind free and click below links for menus and special offers. You can dine in at beautiful eateries and restaurants or enjoy delicious food and drinks right in the comfort of your home, with takeout or delivery. Support our AmCham Discount Partners, so try each and every restaurant if you can! Bon Appétit and Happy Thanksgiving!