Vietnam - Vietnam is losing its competitiveness: EuroCham

Vietnam is losing its competitiveness, Preben Hjortlund, newly appointed president of the European Business Chamber of Commerce (EuroCham) said basing on the declining inflows of foreign direct investment (FDI) in Vietnam recently.

In a survey on business indicators of European enterprises in Vietnam, when answering the question "whether the current economic crisis in Europe affects the company's decision to invest in Vietnam or not", 55% of EuroCham members participating in the survey have confirmed that the crisis has affected them, though only slightly. In contrast, 44% others said that they has no effects.

According to new chairman of the European Chamber of Commerce (EuroCham), Mr. Preben Hjortlund, the drop in FDI recently has shown that Vietnam is losing its competitiveness in the region and investors are looking for other locations. This is especially true when comparing to Indonesia as this country is a major attraction in attracting FDI at this time.

The World Bank (WB)’s report on the business environment in 2012 showed that Vietnam dropped six steps in competitiveness criteria. This is not good news.

According Hjortlund, the biggest obstacle that European investors are experiencing in Vietnam is high inflation. "We hope that in 2012 inflation will ease and the economy will be stable again," he said.

The president also warned, Vietnam’s trade deficit management is also a worrying story (in 2011 Vietnam's trade deficit was $9.5 billion). Instead of managing by limiting imports, the Vietnamese Government should encourage imports to increase exports in the long term.

To attract FDI with better quality, the government should remove unnecessary restrictions in accessing market, affecting the free trade within this year.

VietBiz24

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