Capital flow redirection still uncertain: economists   02:30               Foreign investors are considering relocating their production bases out of China, but this doesn’t mean that all of them will flock to Vietnam. Nguyen Anh Duong from the Central Institute of Economic Management (CIEM) said the FDI capital flow to Vietnam has become stronger under the impact of Covid-19. Previously, foreign investors wavered between leaving China and staying. But now they are more determined about the departure. Despite Covid-19, FDI capital keeps flowing to Vietnam. The Ministry of Planning and Investment (MPI) reported that from the beginning of the year to May 20, 1,212 foreign invested projects were granted investment registration certificates with total capital of $7.44 billion, an increase of 15.4 percent compared with the same period last year. Vietnam has become more attractive to foreign investors thanks to its capability of containing the pandemic very early. Moreover, the 16 FTAs of which Vietnam is a member, especially the FTA with the EU, also helps Vietnam. Nevertheless, Duong stressed that the disruption of the supply chain in China during the pandemic has made investors more cautious, which will change the structure of the value chain. “Vietnam has become more attractive to foreign investors thanks to its capability of containing the pandemic very early. Moreover, the 16 FTAs of which Vietnam is a member, especially the FTA with the EU, also helps Vietnam. “Foreign investors have learned a lesson that they relied too heavily on China. And the lesson also made them realize that they must not rely on other countries as well,” Duong explained. “Therefore, if they think of setting up production facilities in Vietnam, they may install only parts of their production lines,” he said. “Don’t be too excited about the new FDI wave,” he concluded. Thoi Bao Kinh Te Sai Gon quoted Eugene Lim, president of WTS Taxise in Singapore, as saying that multi-national groups will have to think about switching from a concentrated, effective and resource-saving model to a model which disperses risks while ensuring operations at reasonable costs and competitiveness. Lim thinks that instead of setting up big factories in China, the groups will build many small factories in localities near major markets. The factories will increase application of modern technologies in production, including 3D printing, AI and Blockchain, to maintain competitiveness without having to expand production scale. Vo Tri Thanh, a respected economist, commented that politicizing the economy increased in the post-Covid-19 period. The evidence is that countries have called their enterprises back home in the US-China trade war. Protectionism is also on the rise. Thanh, who is also the director of the Institute for Brand and Competition Strategy, said the world is changing fast and investment flows are moving all the time, so Vietnam needs to take the initiative and apply measures to grab capital flow. VNN/Mai Lan