Uniting with Britain to maximise potential

Uniting with Britain to maximise potential

As Vietnam and the United Kingdom witness increasing bilateral trade and investment relations, Gareth Ward, newly-appointed Ambassador of the United Kingdom of Great Britain and Northern Ireland to Vietnam, talked with VIR’s Thanh Dat about his expectations for an increase in British investments in Vietnam with the rise of Industry 4.0.

What is your impression of Vietnam and its growth momentum? Do British investors see the country as an attractive business destination and what changes are they looking for in Vietnam?

I have been here for only two months, but already feel the dynamism of the economy. The UK is rated as the third-largest EU investor in Vietnam, but I believe that the real figures from UK companies are even higher, because many of them invest via their subsidiaries in Singapore or Hong Kong. More British investors are now looking at the Vietnamese market because of its growth potential, openness to global trade, and focus on improving the business environment. For new investors, the availability and consistency of information are always important. Therefore, British companies want more transparency and access to information about business opportunities, processes, and regulations.

Vietnam is working on its strategy to keep pace with the Fourth Industrial Revolution. In what ways can the UK and Vietnam work ­together in this field?

The UK has been responding to the digital era for at least a decade. This has transformed how we shop, entertain ourselves, make financial transactions, travel to work, and manage our health. This revolution has been led by entrepreneurs but supported by the government through creating the right environment for ideas and businesses to flourish.

We established Tech City UK, which actively supports businesses, and we changed the way we operate in government too, including by establishing the world-leading Government Digital Service. The UK can work very closely with Vietnam in different areas, including smart cities, digital health, fintech, digital construction, and education tech.

The UK Prosperity Fund, which will be launched in Vietnam soon, will cover all these areas, helping Vietnam with policies and strategies to embrace opportunities in the digital economy.

There were also 19 ed-tech companies accompanying the British prime minister’s trade envoy to Vietnam last weekend to introduce their products and services, which could help Vietnam to improve its capacity in the education sector.

The UK is about to officially leave the EU, which is going to ink a bilateral free trade agreement (FTA) with Vietnam. Because this FTA will not have the UK as a member, do you think that there should be a bilateral FTA ­between Vietnam and the UK?

The UK thinks that it is necessary to maintain robust bilateral trade relations with Vietnam. This is even more important after the UK officially leaves the EU. The UK and Vietnam became strategic partners in 2010 and a bilateral trade agreement would deepen this relationship.

Vietnam is boosting the ­equitisation of its state-owned enterprises (SOEs) and banks. How can this attract UK investors?

First of all, the equitisation of SOEs is a key part of improving the business environment. UK companies and investors will see this as evidence of the Vietnamese government’s efforts to create an equal playing field in the market.

In addition, British investors and companies will be interested in investing in Vietnamese SOEs in different sectors. However, they need clearer and more consistent information, such as equitisation plans, financial reporting to international standards, and valuation methodologies.

Finally, I am also aware that the London Stock Exchange (LSE) will be very willing to support Vietnamese SOEs to make initial public offerings (IPOs) and list on the LSE. The benefit of listing in London is not just the liquidity and number of investors, but also raising the profile of the companies.

Vietnam is now compiling a new strategy on foreign direct investment (FDI) attraction. Based on the UK’s experience, could you provide some advice for Vietnam to lure in higher-quality FDI?

Vietnam’s success in attracting FDI over the last 30 years is world-leading. Based on the UK’s experience, I think there are three things that will help Vietnam attract more FDI in the future. They all begin with T: talent, transparency, and tax.

The UK has world-leading universities which attract a pool of talent from around the world. We have business licensing procedures that are clear and easy to understand. It takes a company only 24 hours to register its business online. We have consistent tax policies and a robust research and development (R&D) incentives scheme.

For example, as of April 2016, large companies can claim an 11 per cent taxable cash credit (it was 10 per cent prior to April 2015), irrespective of the company’s tax position. The credit can be used to settle taxes owed to the revenue authority or, if certain criteria are met, can be payable in cash.

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