FDI companies in Vietnam have consistently played a crucial role in contributing to Vietnam's economy and its growth. Since the authorization of foreign investment in 1988, Vietnam FDI has been pivotal in transforming the country into a highly appealing destination for international investors. The country’s robust growth in securing FDI has garnered positive feedback from […]
FDI companies in Vietnam have consistently played a crucial role in contributing to Vietnam's economy and its growth. Since the authorization of foreign investment in 1988, Vietnam FDI has been pivotal in transforming the country into a highly appealing destination for international investors. The country’s robust growth in securing FDI has garnered positive feedback from […]
How Singapore attracts high-quality high-tech FDI projects and lessons for Vietnam
Trường Lăng
Trường Lăng, founder and 15-year director of Viettonkin, guides the company's strategic direction, makes top-level decisions, and represents the firm in key business negotiations. With over 20 years of consulting experience in Belgium and Southeast Asia, including 15 years specializing in FDI projects, he has established himself as a top expert who helps clients across industries expand their businesses. His deep knowledge of risk management and business operations, combined with his proven track record of successful consultation projects, makes him a valuable partner for investors seeking quality consulting services.
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Singapore's ability to attract high-quality high-tech foreign direct investment (FDI) projects is a testament to its compelling strategies and business environment. While there is no one-size-fits-all approach, Vietnam can take inspiration from Singapore's achievements and learn valuable lessons to enhance its own investment landscape. By adapting and implementing successful strategies, Vietnam can pave the way for increased high-quality high-tech FDI and foster economic growth.
Singapore’s FDI inflow in the high-tech sector
Singapore's ICT and high-tech sector has emerged as a cornerstone of the country's thriving knowledge-based economy. In 2021, the sector witnessed a remarkable surge in foreign direct investment (FDI), with software and IT services leading the charge. With a staggering 90 projects, this sector alone accounted for over one-quarter (26.5%) of all investments pouring into the country.
The country’s ability to attract high-tech investment can be attributed to its steadfast commitment to fostering a business-friendly environment, supported by a robust infrastructure, substantial investments in R&D, and a highly-skilled labor force. These factors have propelled Singapore to the forefront of the global high-tech industry, establishing it as a premier destination for foreign investors seeking a thriving and innovative business ecosystem.
What makes Singapore an ideal destination for high-tech investors
Singapore's transparent legal landscape and attractive tax incentives have positioned it as an enticing destination for investors looking to tap into the high-tech sector.
One of Singapore's standout features is its efficient and business-friendly environment, as exemplified by the seamless company incorporation process. Foreign investors can establish a business in Singapore swiftly, with the registration procedure often completed within a single day, provided all the necessary documentation is in order. This streamlined process eliminates unnecessary bureaucratic hurdles and allows investors to swiftly kickstart their high-tech ventures.
To further attract top-notch talent and promote technological innovation, Singapore also introduced extensive incentive policies, one of which is the pioneering work permit called Tech.Pass in 2021. This permit is specifically designed to entice highly accomplished technology entrepreneurs, experts, and business leaders. Unlike the traditional Employment Pass, Tech.Pass does not require the sponsorship of a local employer, granting professionals greater flexibility in their activities.
Singapore's attractive tax regime is another enticing factor for high-tech investors. The country offers competitive corporate tax rates and a plethora of tax incentives and exemptions, including research and development (R&D) tax incentives, investment allowances, and enhanced deductions for qualifying expenses. These measures significantly reduce the tax burden for companies operating in the high-tech sector, allowing them to allocate more resources toward innovation and growth.
Well-established infrastructure
Singapore's dedication to infrastructure investment has propelled it to the forefront of global rankings, securing its position as the world leader in terms of infrastructure quality. In 2021, Singapore jumped up two places to claim the number one spot in the Global Infrastructure Index 2021.
Singapore has also invested heavily in the development of cutting-edge facilities and technology parks that cater specifically to the needs of high-tech companies. These specialized zones, such as the renowned one-north precinct, are designed to foster collaboration, innovation, and knowledge-sharing among industry players. They provide state-of-the-art research and development facilities, advanced laboratories, and incubation spaces that support the growth and expansion of high-tech enterprises.
By prioritizing infrastructure development, Singapore has created a solid foundation that supports various sectors, including the high-tech industry.
Government’s intensive investment in R&D
Looking ahead, Singapore has committed to allocating over S$25 billion (US$17.6 billion) for R&D in a continuing effort to build a more resilient and sustainable economy.
To support the R&D efforts, Singapore has also established model factories within its universities and research centers, providing researchers and industry players a testbed for new manufacturing techniques, technologies, and business models, to refine their innovations before they are exported to the rest of the world.
These investments not only foster technological advancements but also create a fertile ground for collaboration between academia, research institutions, and industry players. This collaborative environment fuels the development of groundbreaking solutions and positions Singapore as an attractive destination for high-tech investors seeking to leverage cutting-edge research and innovation.
Singapore’s intensive investment in tech-talent
Singapore boasts a highly skilled workforce, securing the second rank globally in the 2021 Global Talent Competitiveness Index, published by INSEAD.
Despite the global job cuts in the tech sector in the first quarter of this year, Singapore’s tech talent remains resilient and sought after. The country continues to prioritize investments in tech skills, with major banks like OCBC, DBS, and UOB offering training programs for technology staff and tech industry entrants.
The country's collaboration between industry, education, and government entities ensures the continuous development of tech professionals and job opportunities, which ultimately solidifies Singapore's position as a leading destination for tech innovation and investment.
Singapore’s exemplary success in attracting high-tech FDI to the semiconductor sector
The semiconductor industry, characterized by its rapid pace of innovation, finds a welcoming home in Singapore, a nation that recognizes the paramount importance of technological advancements. Singapore's commitment to fostering a culture of research and development (R&D) is evident in its robust initiatives aimed at propelling the semiconductor sector to new heights. Steady and sustained investments in R&D form a key pillar of Singapore's economic development strategy, providing the country with a competitive edge against larger and better-resourced nations. Specifically, in December 2020, the Singapore government announced a significant boost in its R&D budget, allocating $25 billion for the next five years, a 30% increase from the previous allocation. This substantial investment underscores Singapore's unwavering dedication to sustaining its competitiveness and bolstering its status as a leading tech and innovation hub, further reinforcing its commitment to supporting the semiconductor industry. By continuously investing in R&D, Singapore ensures that it remains at the forefront of semiconductor technology, attracting high-tech FDI and solidifying its position as a global leader in innovation.
What key lessons can Vietnam learn from Singapore’s success in attracting high-tech investments?
The Vietnamese government has set clear targets and objectives to draw high-tech FDI. Specifically, the National Strategy for Foreign Investment Cooperation for the 2021-2030 period aims to raise the percentage of registered foreign capital from Asia, Europe, and the US to over 70% of the total disbursed in Vietnam by 2025 and 75% by 2030. However, the country’s still facing several challenges related to infrastructure development, the lack of industrial real estate properties, eco-industrial parks, and the complexity of the administrative procedures. To fully realize this vision, Vietnam must tackle these obstacles by taking inspiration from Singapore's experience.
Incentives and Streamlining Administrative Procedures
Singapore's exemplary success in attracting high-tech investments offers valuable insights for Vietnam. One crucial aspect is the provision of attractive incentives and the streamlining of administrative procedures.
To stay competitive in the region, the Vietnamese government must ensure that its incentive packages remain attractive to potential investors since the current complex administrative procedures can pose a significant challenge to funding opportunities. The approval and licensing process can be onerous, with differing requirements and timelines between provinces.
Thus, to enhance the country's attractiveness for investment, it’s important that the Vietnamese government streamline the licensing and approval procedures for projects. Simplifying the process will enable companies to establish their operations promptly and encourage more inflows into the country.
Enhancing Infrastructure and Facilities
Singapore's success in attracting high-tech investments is closely tied to its highly developed infrastructure, which has played a pivotal role in facilitating business operations and logistics. Vietnam should prioritize enhancing both the quantity and quality of its infrastructure and facilities to attract high-tech foreign-led companies. While the northern region of Vietnam has made significant strides in transportation infrastructure over the last five years, there is a pressing need to improve road transport systems and airports in the southern region. This will accommodate the surging demand and logistical requirements of existing and potential manufacturers. By investing in robust transportation infrastructure, Vietnam can effectively address connectivity challenges and position itself as an attractive destination for high-tech investments.
Final thoughts
Singapore's remarkable success in attracting high-quality high-tech foreign direct investment (FDI) projects serves as a valuable blueprint for Vietnam. The nation's proactive approach, characterized by a business-friendly environment, state-of-the-art infrastructure, enticing incentives, and a skilled workforce, has propelled it to the forefront of the global high-tech investment landscape.
Vietnam has much to gain by emulating Singapore's strategies and adapting them to its unique context. By cultivating an environment that nurtures business growth, streamlining administrative procedures, and offering compelling incentives, Vietnam can position itself as an irresistible destination for high-quality high-tech FDI projects, fostering remarkable economic development and innovation.
To delve deeper into Vietnam's immense potential and gain invaluable insights into navigating its dynamic investment landscape, we would like to invite investors and business owners to join our upcoming webinar, "Unlocking Business Opportunities in Vietnam.” This exclusive event promises to unveil the untapped possibilities that Vietnam holds, enabling participants to connect with industry experts, engage in meaningful discussions, and acquire the knowledge needed to make informed investment decisions.Seize this unique opportunity to unlock the doors to Vietnam's thriving business landscape. Reserve your spot today and embark on an exhilarating journey toward maximizing your investment potential in Vietnam's high-growth sectors. Together, let's explore the limitless horizons of Vietnam's dynamic economy and pave the way for a prosperous future.
Vietnam is emerging as a prime destination for foreign direct investment (FDI), driven by rapid economic growth, favorable government policies, and an investor-friendly business environment. This eBook provides a deep dive into Vietnam’s economic landscape, highlighting key industries such as manufacturing, real estate, and digital banking that attract FDI. It also explores the government’s proactive measures to streamline investment procedures, improve infrastructure, and offer tax incentives for foreign enterprises. Additionally, it covers crucial insights into market entry strategies, regulatory requirements, and socio-cultural factors that influence business success in Vietnam.
Download the eBook now to gain expert insights into successfully navigating Vietnam’s dynamic investment landscape!
Vietnam is emerging as a prime destination for foreign direct investment (FDI), driven by rapid economic growth, favorable government policies, and an investor-friendly business environment. This eBook provides a deep dive into Vietnam’s economic landscape, highlighting key industries such as manufacturing, real estate, and digital banking that attract FDI. It also explores the government’s proactive measures to streamline investment procedures, improve infrastructure, and offer tax incentives for foreign enterprises. Additionally, it covers crucial insights into market entry strategies, regulatory requirements, and socio-cultural factors that influence business success in Vietnam.
Download the eBook now to gain expert insights into successfully navigating Vietnam’s dynamic investment landscape!
Founded in 2009, Viettonkin Consulting is a multi-disciplinary group of consulting firms headquartered in Hanoi, Vietnam with offices in Ho Chi Minh City, Jakarta, Bangkok, Singapore, and Hong Kong and a strong presence through strategic alliances throughout Southeast Asia. Our firm’s guiding mission is aimed towards facilitating intra-ASEAN investments and connecting investors in Southeast Asia with the rest of the world, thus promoting international business relationships and strengthening inter-nation connections.
