The current shift to Vietnam by Panasonic, Apple and Samsung represents a spectacular achievement in attracting quality FDI inflows and generating great job opportunities for Vietnamese.
This is an opportunity for Vietnam to contribute to the global value chain after many years of effort to be a preferred base for electronics production. The shift has opened excellent chances for Vietnamese employees to work for one of these global tech and electronic leaders. In this article, we have covered 5 of the biggest benefits to Vietnam from this strategic move.
1. Quality FDI inflows from these industry leaders will help improve overall income, savings and investment throughout the nation
FDI has been a huge capital resource for Vietnam, assisting the country out of the vicious circle of poverty, characterized by low income, low savings and low investment.
A large number of empirical studies find that foreign affiliates pay higher wages relative to domestic firms in both developed and developing countries. The wage differential between domestically and foreign-owned firms ranges from approximately 10 to 70 percent, depending on the country considered.
2. More jobs are generated
FDI from such leaders are significant in contributing to and boosting any country’s growth. One of its primary benefits includes the generation of more new jobs.
According to the Nikkei Asian Review, Panasonic currently employs about 8,000 people in Vietnam. The existing Vietnam plant, located outside Hanoi, is the company's largest manufacturing hub for refrigerators and washing machines in Southeast Asia and has excess capacity. Excess capacity means that capital equipment is in place and ready for human resources
3. High technology, skills and advanced business practices transfer leading practices to enhance sustainable development
When It comes to transferring technology, skills and advanced business practices from home countries to host countries, host countries will be able to gain access to these matters as well as absorbing them into their production process.
Such FDI projects bring in high technology, skills and advanced business practices linked to sustainable development.
4. More competitive business environment
As Vietnam shifts its focus to creating a more transparent and competitive business environment, greater levels of FDI can have positive benefits, especially international competitiveness, improving the performance of local industry and lowering domestic prices.
5. Improve infrastructure and the quality of human resources
Vietnam can offer competitive incentives to potential investors like Panasonic, Apple, Samsung, etc. This will encourage all private and public sectors to give priority to addressing bottlenecks in the country’s investment environment, such as improving the infrastructure network and quality of human resources.
In this article:
Director - Industrial
RGF Executive Search Vietnam