In the “fact sheet” of the US White House website, it is recorded that when US President Joe Biden met Nguyen Phu Trong’s delegation in Hanoi on September 10, 2023 during the diplomatic signing ceremony “Comprehensive Strategic Partnership Vietnam-United State” President Joe Biden states: “The United States recognizes Vietnam’s potential to play an important role in building a semiconductor supply chain capable of manufacturing and technology under the US CHIPS Act” [1]. This is a promise that pleases the leaders of the Communist Party of Vietnam (CSVN). The CHIPS Act (Đạo Luật Creating Helpful Incentives to Manufacture Semiconductors) was passed by the US Congress and signed into law in August 2022 with a budget of 280 billion USD in financial subsidies for semiconductor manufacturing companies. This includes 52.7 billion USD [2] for semiconductor research and production in the US, 39 billion USD for subsidies for chip manufacturing activities everywhere, 13 billion USD for semiconductor materials research and workforce training. workers with the aim of strengthening US supply chain resilience and countering China [3]. 174 billion USD invested in the ecosystem, scientific research of quantum computing, materials science, biotechnology, experimental physics…

With billions of US dollars, it is the desire of the Vietnamese communist state as well as the hope of semiconductor chip manufacturing companies in the US that want to invest in Vietnam.

But when investing in the field of semiconductor chips in Vietnam, American and foreign companies will certainly face huge risks. If you invest money in a semiconductor electronics company in Vietnam, you will return empty-handed for the following reasons:

1) Lack of human resources: Vietnam is a newly developed country, for many years its scientific and technical education has been in a backward state. According to the EdTech education program (combining “education” and “technology”), Vietnam is in the early stages of technology [4]. Thus, the quantity as well as the quality of technical experts are still very weak, causing state-of-the-art semiconductor electronics companies investing in Vietnam to lack human resources. Human resources are an extremely important chain in the success of a semiconductor engineering company. If you need workers to assemble machinery with low end company, you can come to Vietnam to make a profit, but investing in high-tech companies in Vietnam is a mistake because of the lack of human resources.

2) Unstable power source: Electricity in Vietnam currently does not meet power needs. In early June 2023, people in Hanoi as well as northern and southern provinces often suffered power outages [5] without prior notice… Due to lack of electricity, many companies had to temporarily suspend production. That is why the US company Intel Corporation announced large investments leaving Vietnam to Europe in July 2023 [6] because of electricity shortages.

3) Administrative instability: Vietnam is a system of corruption everywhere that all people know, especially through the “burning furnace” that exposed the terrible corruption of Vietnamese Communist officials. The administrative system in Vietnam is a corrupt system, so the operating licenses of foreign companies entering Vietnam must go through many levels of Vietnamese Communist officials from low to high. Every time you want to pass a level, you have to pay a bribe. When Intel Company left Vietnam, it left a complaint about “heavy bureaucracy in Vietnam” [7]. It is systematic corruption that has created heavy bureaucratic problems in Vietnam.

4) Banking and financial instability: Through the recent case of billionaire Truong, My Lan in Saigon City, Mrs. Truong, My Lan was sentenced to death for appropriating SCB bank assets of more than 677,000 billion VND (nearly 28 billion USD) [8]. The two fields of banking and finance are closely related to money management. Banks hold customers’ money and facilitate customer transactions. Finance companies also use banks as transaction intermediaries. Thus, the financial system depends closely on banks. After the trial of Mrs. Truong, My Lan, who was the owner and plotted to appropriate the bank’s assets, how can we trust the banking system in Vietnam? Companies investing in Vietnam must go through banks to import and export capital as well as to pay salaries to employees. So do foreign companies feel secure when using the Vietnamese banking system?

There is no owner appropriating the bank’s assets, but the situation of impersonating a US bank to defraud customers is as shown on JP Morgan’s website: “JP Morgan notifies those who impersonate JP Morgan or other organizations. Other finance, providing personal loans. This is not a product offered by JP Morgan. JP Morgan does not have any business activities in Vietnam and the company has not authorized any company or individual to represent JP Morgan Chase in any form. Please be alert and refuse to take any action related to these scams”.

5) Political instability: In recent years, two President of the Socialist Republic of Vietnam has been dismissed mid-term, such as Nguyen, Xuan Phuc, was forced to resign before the Lunar New Year 2023 on January 17, 2023 for corruption [9]. Vo, Van Thuong replaced Mr. Phuc. After more than a year, on March 20, 2024, he was forced to resign as President because of corruption [10]. Not only was the President dismissed, but in the middle of his term, National Assembly Chairman Vuong, Dinh Hue was also forced to resign on April 26, 2024 [11] for corruption. In just 3 years, two Presidents and a Chairman of the National Assembly lost their positions, showing a very politically unstable state.

An immutable rule for foreign investment companies is that wherever there is one of the above five instabilities, the foreign company will consider investing very carefully. Up to now, the Vietnamese communist state has propagated to foreign countries that Vietnam is a very stable country, so many foreign companies have jumped in to invest in Vietnam. Now everything has been exposed to the sunlight, Vietnam is facing not only one but five of instability, so companies that want to invest in Vietnam must be highly risky.

United States, May 2, 2024

Le, Thanh Nhan

Nguyên văn: Năm nguy cơ cho các công ty ngoại quốc đầu tư vào Việt Nam

[1] https://www.whitehouse.gov/?s=vietnam
[2] Johnson, Lamar (August 9, 2022). “Biden ends slog on semiconductor bill with signature”. POLITICO.
[3] R&D Funding Breakdown: CHIPS and Science Act
[4]https://www.trade.gov/country-commercial-guides/vietnam-education-and-training
[5] https://vnexpress.net/tinh-trang-mat-dien-dang-dien-ra-the-nao-4614064.html
[6]https://www.reuters.com/technology/intel-shelves-planned-chip-operation-expansion-vietnam-source-2023-11-07/
[7]https://www.rfa.org/vietnamese/news/vietnamnews/intel-shelves-planned-chip-operatin-expansion-in-vn-11072023080706.html
[8]https://xaydungchinhsach.chinhphu.vn/dai-an-van-thinh-phat-truy-to-truong-my-lan-va-85-bi-can-119231215145320997.htm
[9]https://asia.nikkei.com/Politics/Vietnam-s-President-Phuc-dismissed-amid-Trong-s-anti-graft-drive
[10] https://www.bbc.com/vietnamese/articles/c0d3xp1eddgo
[11]https://www.voatiengviet.com/a/tro-choi-vuong-quyen-vuong-dinh-hue-va-chinh-truong-viet-nam-trong-con-mat-quoc-te/7596211.html