Investment incentives are no longer the decisive factor for foreign investors choosing Vietnam as an investment destination, with policy predictability, human capital, and the strength of the supporting ecosystem becoming increasingly important, said the CEO of Nestlé Vietnam.
Speaking at a government forum titled “Resolution 10: Developing a high-quality FDI ecosystem,” held by the Government Information and Communications Department on Friday, Binu Jacob, CEO of Nestlé Vietnam, said foreign investors had traditionally placed significant emphasis on investment incentives.
Binu Jacob, CEO of Nestlé Vietnam. Photo courtesy of the government’s news portal.
But the introduction of the global minimum tax has changed the equation, he said, with incentives increasingly serving as a supplementary factor rather than the core reason for multinational companies to invest or expand in Vietnam.
“For global groups such as Nestlé, the first decisive factor is our confidence in the strategic direction set by the Vietnamese government,” Jacob said.
A transparent and predictable policy framework is also critical, he noted, adding that while policy adjustments are inevitable as an economy develops, changes should follow a predictable roadmap.
“What investors fear most is uncertainty and instability that cannot be anticipated,” he stressed.
Jacob said the quality of Vietnam’s workforce was another key pillar supporting long-term investment decisions, alongside a strong supporting ecosystem that would allow multinational companies to implement long-term investment strategies.
Even if these conditions are not yet fully developed, clear government commitments to improving them could give investors greater confidence to expand, he stated.
The executive said Vietnam had recently made notable progress in governance and had sent increasingly positive signals about its policy direction.
The country was among the few countries in the region to demonstrate what he described as a relatively consistent strategic vision, while its investment environment remained stable and its policy framework relatively predictable.
The country also had strong human capital, particularly among its younger generation, which Jacob described as having significant potential. The supporting ecosystem remains an area where Vietnam needs further development, he added.
While the current ecosystem does not yet fully meet investors’ expectations, links between foreign companies, domestic businesses, educational institutions, and research organizations are becoming increasingly established.
He said concrete policy measures and actions to strengthen those links would send a strong signal to investors.
Creating a more business-friendly environment would also allow domestic companies to strengthen their capabilities and become more reliable partners for multinational corporations, the executive remarked.
For foreign investors, long-term cooperation with suppliers ultimately rests on trust, he said. “When strategic trust is established, we will certainly find effective solutions to challenges that arise,” Jacob stressed.
According to the General Statistics Office, Vietnam lured $30.06 billion in registered foreign investment in the first seven months of this year, up 58% year-on-year, including $21.05 billion in newly-registered capital.