The COVID pandemic is still the world’s biggest problem, causing certain difficulties in relocation decisions and activities, Vietnam is still considered the best place to invest for many multinational companies in the world. So what will the FDI in Vietnam look like in the next few years?
1. How’s the FDI in Vietnam in recent years?
1.1. FDI in Vietnam in the Covid-19 pandemic
Despite the negative socioeconomic effects of COVID-19, Vietnam is one of only a few countries that will have positive economic growth in 2020.
According to the General Statistics Office (GSO), Vietnam’s GDP will grow by 2.91 percent in 2020. This represents two primary factors: the country’s relative success in managing the pandemic’s health and business threats, and its ability to maintain investor trust.
On the report of GSO, industrial production increased by 3.3 percent in 2020. Construction, utilities, and manufacturing all experienced positive growth rates. Mobility limitations and decreased investment, on the other hand, harmed services.
For example, the transportation and hospitality sectors shrank by 1.8 and 14.6 percent, respectively. As a result, the 2.91 percent economic growth in 2020 was asymmetrically distributed.
Aside from asymmetric gains, the position of foreign capital in the Vietnamese economy has been a critical component of the country’s 2020 economic development. The approximate value of FDI projects in the first 11 months of the year was US$17 billion, taking the total cumulative FDI stock value to US$382 billion across 32,915 projects.
With so many foreign companies deciding to invest in Vietnam, the demand for software engineer staffing in Vietnam will increase shortly, especially in 2021, when Vietnam is the best safe place to invest.
1.2. FDI in Vietnam after the Covid-19 pandemic
1.2.1. A bright spot in 2022
Despite a year-on-year reduction in value, foreign investment in Vietnam remained a bright spot in the Vietnamese economy last year (2022), with disbursement hitting a five-year high.
According to data from the Ministry of Planning and Investment, there were 2,036 newly registered foreign direct investment (FDI) projects worth $12.45 billion as of December 20, up 17.1% year on year in terms of quantity but down 18.4% in terms of value. Furthermore, 1,107 projects had their capital adjusted, totaling $10.12 billion, up 12.4% and 12.2% year on year, respectively. Capital contributions and share purchases (foreign indirect investment, or FII) were $5.15 billion, a decrease of 25.2%. This figure brings total foreign investment in the country to $27.7 billion by 2022.
Meanwhile, the General Statistics Office (GSO) announced that FDI in Vietnam in 2022 reached over $22.4 billion, up 13.5% year on year, the largest amount in the previous five years. The country had 36,278 legitimate projects with a total registered capital of around $438.7 billion as of December 20, 2022. The overall realized capital of foreign investment projects surpassed $274 billion, accounting for 62.5 percent of total valid registered investment capital.
Foreign investors poured funds into 19 of the 21 sectors in the national economic classification system, with the processing and manufacturing industry continuing to lead in terms of attracting FDI, with a total investment of more than $16.8 billion, accounting for 60.6 percent of the total capital in the country.
Singapore placed first among 108 nations and territories investing in Vietnam this year, with $6.46 billion. South Korea ($4.88 billion) and Japan ($4.78 billion) followed.
1.2.2. A bright future of FDI in Vietnam
According to the Foreign Investment Agency (FIA) of the Ministry of Planning and Investment, foreign investment inflows into Vietnam are expected to reach US$36-38 billion in 2023.
Foreign investment is likely to total $22-23 billion this year, according to Deputy Director of the FIA Văn S.
The opening of China's economy may have an impact on Vietnam's foreign investment attraction, according to S, who added that China remained the region's leading investment destination, so when they opened up, capital would flow into this market while capital to Viet Nam and other economies in the region would be limited.
On the contrary, investment capital migration from mainland China to South Korea, Japan, and Taiwan would be increased. This transition will be intensified until 2025, with Vietnam becoming a favored investment location for investors, according to S.
South Korea, Japan, and Taiwan (China) are now Viet Nam's primary foreign investment sources, and they have steadily grown their investments in Southeast Asian nations.
According to the FIA, critical criteria for FDI in Vietnam to continue to thrive in 2023 included economic growth outcomes in 2022, authorities' never-ending efforts to improve the business investment climate, building confidence with investors, and efficiently leveraging the benefits of free trade agreements.
2. How foreign companies can have quality and suitable employees when doing business in Vietnam?
The young population of Vietnam has identified the country as one with abundant labor resources. However, many large international companies in Vietnam continue to face difficulties in recruiting many skilled employees, especially software engineer staffing in Vietnam.
As claimed by the Online recruitment in Vietnam research in 2018, there is a significant mismatch between employee skill level and employer demand and the problem still consists, even in 2021. One of the most serious drawbacks of Vietnam’s human resource market is a lack of qualified workers.
In the circumstance of a labor shortage in terms of skills and experience, the remaining talented candidates seeking to work for a foreign organization are another factor that puts businesses in this country at risk of losing employees or making it more difficult to hire.
To attract talented employees, you as foreign companies can increase the salary and benefits or use staffing to expand your business and outsource recruitment.
3. Can virtual staffing help you attract talented employees?
3.1. The find-talent-candidates progress
The short answer is yes, they can but you might need to wait for quite a long time for the staffing agencies to do their job to find a talented candidate that meets all of your requirements, here is all the basic work they have to do:
At first, the agency is received with a job description from the organization having an open position.
After receiving the job requirement and going through it in detail the agency shortlists candidates. This is done by searching and shortlisting CVs and resumes of the candidates that are the best fit for the job requirements.
Then, the organization selects the individuals who would be the best options for the position.
The organization then asks agencies to arrange an interview between the company and the candidate.
Almost every recruitment agency has many networks. Each consultant has the potential to leverage their networks to help connect you to the right people.
3.2. Virtual staffing efficiencies
3.2.1. Outsources to experts
Virtual staffing is the practice of accessing specialized expertise for specific tasks, regardless of the employee's location. This concept is not new, as companies have been hiring firms and individuals for short- and long-term projects for years. However, what is more recent is the expansion of virtual staffing to include a wider range of roles and fields, and for longer durations. By utilizing virtual staffing, businesses can benefit from the efficiency and productivity of having off-site employees or teams dedicated to their needs for as long as necessary.
3.2.2. Lowers costs
Virtual staffing offers clear cost savings, both apparent and hidden. The most obvious saving comes from reduced office space requirements, resulting in lower rent and the elimination of associated costs such as furnishings, utilities, supplies, maintenance, and relocation expenses. A study revealed that allowing employees to work from home part-time could save $11,000 per employee annually. Additionally, virtual roles significantly reduce expenses like business travel.
3.2.3. Accelerates new skill deployment
The world of work is undergoing a reskilling revolution due to automation replacing 95 million jobs by 2025 while creating 87 million new jobs. However, the challenge lies in the fact that the required skills for these new jobs do not yet exist. Additionally, skills have a shrinking "shelf life," with tech skills becoming outdated within 2-3 years. Virtual staffing offers a solution:
Facilitating on-demand hiring for new skills.
Accessing labor markets with the desired skills.
Partnering with virtual staffing businesses that continually reskill their workers.
Hiring new employees and training them in new skills is time-consuming and inefficient. In contrast, virtual staffing businesses maintain learning academies to constantly train and upskill their workers, ensuring a readily available pool of skilled individuals when employers need them.
Although the covid pandemic affects the entire world economy, Vietnam still is considering the best place to invest in many years to come, you can see that based on the total number of FDI invest directly in Vietnam And if you want to have the best chance to find the right talent for your company in this tough time, hiring virtual staffing is a smart move.
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