Việt Nam needed to redefine its competitive advantages in the new period to be ready to receive foreign direct investment flows from the United Kingdom (UK), experts have said.

Despite cheap labour costs and abundant personnel resources, Việt Nam should rely on new factors including an attractive and transparent investment environment, simplified and digitalised administrative procedures, and infrastructure development, they said.

In addition, the UK is a country with a developed high-tech industry, so to effectively attract FDI from the UK, Việt Nam should establish an ecosystem that could effectively support domestic suppliers with sufficient management capacities so that they could meet the needs of tier 1 and tier 2 suppliers of British foreign-invested enterprises in Việt Nam.

According to experts, the UK’s investment in Việt Nam will likely increase thanks to many favourable factors. These include close relationships in multiple areas such as education, science and technology, industry, and energy as well as the UK’s applause for Việt Nam’s commitment to achieving net-zero energy emissions by 2025. The UK then vows to provide Việt Nam with technical support, expertise as well as establish partnerships and energy transition and climate change programmes for Việt Nam.

As of August 20, 2023, the UK had 542 direct investment projects in Việt Nam with registered capital of about US$4.29 billion, ranking 15th out of 143 countries and territories investing directly in Việt Nam.

The processing and manufacturing industry lured the lion’s share of UK investment with 117 projects worth $1.59 billion, accounting for 38.1 per cent of the total investment capital.

The property sector came next with seven projects, valued at $701.44 million or 16.7 per cent of the total. It was followed by the mining sector, wholesale and retail, car and motorbike repair, accommodation and food services, water supply and waste treatment, science and technology, and education.

UK investors poured their investments into 36 localities and offshore areas in Việt Nam. Of which, HCM City took the lead with 244 projects with capital totalling over $909 million or equivalent to 21.6 per cent of the total UK investment in Việt Nam. Offshore areas came next with five projects capitalised at $688 million and Đồng Nai Province with 11 projects valued at $670.8 million. Others were Hải Dương, Long An and Bình Dương provinces.

Over the past eight months of 2023, the UK had a total of 34 new investment projects in Việt Nam with registered capital reaching $48.3 million. Among European countries, the UK is now the second-largest foreign investor in Việt Nam, just after the Netherlands.

According to Deputy Minister of Industry and Trade Nguyễn Sinh Nhật Tân, the UK-Việt Nam Free Trade Agreement (UKVFTA), taking effect since May 2021, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which the UK joined on July 16, 2023, would be strong drivers to further develop two-way relations, especially in investment in the future.

VNA