Groundwork laid for the dual transition

Danish-backed jewellery maker Pandora last week broke ground on a $150 million factory at VSIP III Industrial Park in the southern province of Binh Duong. Scheduled to begin operations in early 2026, the factory will produce 60 million pieces of jewellery annually, boosting the group’s production capacity by 50 per cent.

The factory will be powered entirely by renewable energy and built to LEED Gold standards, supporting Pandora’s goal to halve carbon emissions across its supply chain by 2030 and achieve net-zero emissions by 2040. The facility will create approximately 7,000 jobs, with recruitment starting in early 2025.

“We are ready to start a new chapter in Vietnam. The new facility is crucial to meet future demand and support our growth,” said Alexander Lacik, CEO and president of Pandora. He highlighted Vietnam’s long-standing craft tradition and Binh Duong’s robust industrial infrastructure and governmental support as key factors in their decision to develop here.

Adjacent to Pandora’s factory, Danish conglomerate Lego is also constructing its first carbon-neutral facility worldwide, with a total investment of $1.3 billion.

Vo Van Minh, Chairman of Binh Duong People’s Committee, stated, “The presence of both Lego and Pandora at VSIP III is a testament to the province’s successful economic transformation, making it an attractive destination for international investors.”

Jacob Jensen, Denmark’s Minister of Food, Agriculture, and Fisheries, also highlighted, “Vietnam has become an increasingly important market for Danish investors, thanks to its favourable business environment and commitment to achieving net-zero emissions by 2050.”

There are more major investment moves taking place in Vietnam. Last week, domestic tech giant VNG partnered with Nvidia to enhance its cloud computing capabilities, aligning with the US chipmaker’s strategy to expand its presence across Asia. This partnership was announced shortly after Nvidia CEO Jensen Huang’s visit to Asia, aimed at strengthening regional ties.

Haiphong People’s Committee and Ecovance Vietnam, a subsidiary of South Korea’s SK Group, last week broke ground on a high-tech biodegradable materials factory in Hai An district.

Park Won Cheol, CEO of SKC Group, stated, “This modern factory is designed for the global biodegradable materials market. It is rare for advanced technology developed by SKC to be applied in a factory outside South Korea.”

The venture, undertaken by Ecovance Vietnam, aims to produce biodegradable plastics and related materials. It marks SK Group’s first venture in Vietnam, highlighting their expertise in secondary batteries, semiconductor materials, and eco-friendly products.

On a locality level, Ho Chi Minh City is also making strides to attract high-quality foreign direct investment (FDI). Tran Phu Lu, director of Ho Chi Minh City Investment and Trade Promotion Centre, last week revealed at an investment promotion event that the new legal framework for Resolution No.98/2023/QH15 will leverage the city’s potential and create breakthroughs to resolve economic and social bottlenecks.

“The resolution includes pilot projects for transit-oriented development, build-operate-transfer contracts for expanding existing road projects, and expanding public-private partnerships in healthcare, cultural sports, and attracting strategic investors to key projects,” he said.

Currently, Ho Chi Minh City is prioritising digital and green transition, aiming for sustainable development with a focus on high technology, supporting industries, microelectronics, semiconductors, finance and banking, IT, and logistics. This approach is expected to pave the way for high-quality FDI attraction, similar to the successful investments seen in Binh Duong, Haiphong, and Bac Ninh province.

According to Prof. To Trung Thanh of the National Economics University, although the domestic private sector is large in number, with 97 per cent of enterprises being small or medium in size and primarily operating in commerce, services, wholesale, and retail, they are not strong enough to be the main economic pillar.

“In contrast, foreign-invested enterprises (FIEs), mostly large ones, focus on processing and manufacturing, accounting for over 70 per cent of total import-export turnover. This makes FDI one of the most important pillars of economic growth for Vietnam,” Thanh said.

On the other hand, he also acknowledged that Vietnam has not fully assessed whether additional incentives are needed to attract investment, including corporate income tax incentives and non-tax measures.

“The global minimum tax (GMT) is to impact over 120 FIEs in Vietnam currently enjoying tax exemptions and reductions with effective rates below 15 per cent,” he said. “ASEAN countries are urgently adapting to the GMT, and Singapore and Thailand have introduced policies to attract FDI. Vietnam should study these experiences, as tax incentives are no longer our competitive edge.”

Meanwhile, at last week’s event held by Vietnam Investment Review on Vietnam’s green-digital dual transition, speakers emphasised that foreign investors prioritise profitability, stability, predictability, clarity, and transparency in policies and regulatory frameworks. Ensuring these attributes is crucial for building trust and confidence among investors, they said (see quotes, and pages 5-7).

In addition, human resource upskilling and a stable legal framework are among the most critical factors for attracting and retaining foreign investment.

Source: Vietnam Investment Review