TURNING STATIC INTO DYNAMIC ADVANTAGES HELPS VIETNAM IMPROVE COMPETITIVENESS.
Ngày:20/07/2020 02:46:09 CH
In the context of complicated movements of Covid-19, combined with the US-China trade war, enterprises tend to relocate their factories from China to ensure production, business activities. International and domestic experts shared the view that the wave of FDI is moving away from China and may enter India, Vietnam, Indonesia or other countries.
Around the world, there are many theories explaining why multinational companies (MNCs) decide on where to invest. According to Dunning (1981), MNCs will evaluate the OLI model in a dynamic direction, that is, consider the shift of FDI in the direction of initiative, change, not static direction.
For example, with companies choosing where to consume, they not only assess the potential of the current market (GDP, average GDP, population, average growth rate), but also consider the potential of future development of that location. Or if the future labor costs of the capital receiving market are increasing, the more the market loses its cost advantage, which will affect the companies' decision to reinvest. Or the average wage of the national labor force that receives increasing capital but not increasing productivity will be detrimental to future investors, although they are now acceptable.
Reality is not like many people think. That is, FDI into India has continuously increased since the end of 2019, even in the period of dealing with Covid-19, India still attracts record FDI with 49.97 billion USD in 2019, up 13%. compared to 2018 (India Department of Trade and Industry Promotion - DPIIT, 2020). DPIIT's statistics also show that, in the first three months of 2020, India attracted US $ 13.2 billion, up 21.76% over the same period in 2019 (US $ 9.87 billion).
For Vietnam, in 2019, we attract a record range of FDI, but in 2020, within the Covid-19 pandemic, the amount of FDI into Vietnam is decreasing. Data from the Foreign Investment Agency (Ministry of Planning and Investment) shows that, in May 20, 2020, the total newly registered capital, adjusted and contributed capital to purchase shares of foreign investors reached 13.89 billion USD, equaling 83% compared to the same period in 2019. The comparative results by month are similar, if in January 2020, Vietnam attracted 5.3 billion USD, then in February, only revenues attracted 1.14 billion USD, in March was 2.08 billion USD, in April was 3.78 billion USD and in May was 1.56 billion USD.
So, which national strategy for Vietnam to attract FDI is shifting from China?
The answer to the question is what strategy Vietnam needs to attract FDI, whether it is a dynamic competitive strategy or whether Vietnam needs to promote and improve its dynamic competitive advantage, not just relying on static advantages (such as natural resources, abundant labor with cheap price, average quality, geographical location ...).
What Vietnam needs to do is to promote or transform static advantages into dynamic advantages, such as continuous training, improvement of labor quality, improvement of technical infrastructure, information and social infrastructure. and logistics infrastructure associated with promoting the geographical location of the gateway of the three Indochinese countries, international maritime transshipment points. In order to do so, there must be dynamic or flexible policies from policy makers.
In order to decide on investment options in any country, investors must always conduct market surveys and assess the most comprehensive way. But this evaluation is not only done in the immediate future, but also on the basis of future development potential. A country with positive development indicators will be the preferred choice during the investment trip, to ensure that investors' long-term strategies are met in the future. Believing that Vietnam will be an ideal destination for investors to do so.