Vietnam Investment and Business Environment: Open, Transparent in Line with World Standards
For the past 30 years since the Law on Foreign Investment took effect, Vietnam has attracted 24,580 foreign direct investment (FDI) projects with a total registered capital of US$316.91 billion.
A recent report showed that FDI companies have played an increasingly important part in Vietnam’s economic development for the past 30 years. Foreign-invested companies account for over 70 per cent of the country’s export value and over 50 per cent of industrial production value.
FDI - integral and important part in Vietnam economic development
By the end of 1987, the Law on Foreign Investment in Vietnam was approved by the National Assembly. Vietnam has so far attracted 24,580 valid foreign-invested projects with a total registered capital of US$316.91 billion.
The FDI sector has invested in 19 out of 21 sectors and operated in 63 provinces and cities across the country. Investors from 128 countries and territories have invested in Vietnam.
Over the past 30 years, FDI has brought positive values to the economy. Its contributions are expressed with very specific figures such as tax value. It paid US$5.43 billion in 2014, US$5.8 billion in 2015 (up 6.8 per cent) and US$7.1 billion in 2016 (up 22.4 per cent), accounting for 14.8 per cent of total budget revenue. In particular, the FDI sector plays an important role in exports, accounting for 71.5 per cent of total exports in 2016.
Pros and cons
Foreign investment has created a new way of investment attraction, contributed to economic growth, boosted and enhanced the performance of domestic investment resources. Currently, foreign investment accounts for about 25 per cent of total social investment and over 20 per cent of GDP of Vietnam.
Foreign investment has also helped to create jobs and improve the quality of human resources constituted by over 3.5 million direct workers and 4-5 million indirect workers. At the same time, it has also helped improve technological levels and technical human resources, especially in such industries as petroleum, electronics, telecommunications, information technology, manufacturing, garment and textile, and leather and footwear.
Currently, 59.4 per cent of FDI capital is invested in manufacturing industry which generates over 50 per cent of industrial production value, thus helping Vietnam access modern and advanced technologies of the world and form some important industries like electronics, software, information technology, precision engineering and petroleum.
FDI has also helped speed up State-owned enterprise restructuring, reform administrative procedures, improve market economy institutions, and promote national economic integration, enabling Vietnam to expand its external relations, advertise national brand name and gradually strengthen the force of Vietnam in the context of globalisation.
In addition to quantifiable contributions, according to experts and economic organisations, the FDI sector has generated strong ripple effects on other sectors of the economy, stimulate domestic investment resources, restructure the economy, diversify products and introduce new high-quality services like banking, insurance, audit, shipping, logistics, hotels and offices.
Apart from positive achievements, FDI has also caused certain shortcomings and problems needed to be addressed like underestimated employment, underperformed industry transfer, transfer pricing, tax evasion and environmental pollution.
In the coming time, to deal with difficulties and shortcomings in FDI attraction, we need to implement many consistent measures like effectively carrying out solutions to perfect the legal system and policies related to investment and create favourable conditions for investors to make Vietnam a more competitive destination than other countries in the region.
Under Resolution 103/NQ-CP dated August 29, 2013 of the Government, it is necessary to improve the investment environment, improve state management of foreign direct investment, and increase FDI inflows into Vietnam with higher quality and efficiency.
Vietnam will select high-quality, high-tech, environment-friendly and highly competitive projects that are in line with economic restructuring plans of each region, each industry and the country as a whole; attract large-scale projects and competitive products to build and develop supporting industries and enterprises.
Vietnam will focus on attracting investment capital from large corporations and multinationals and from small and medium enterprises as well. We will not allow projects that pollute the environment, waste energy, use backward technology and use land and other resources inefficiently.
We will attach importance to mobilising all available resources to make breakthroughs in synchronous infrastructure construction strategies, particularly traffic systems which connect regions and economic zones and quickly deploy the new investment form - public - private partnership (PPP).
We will speed up labour training to meet recruitment demands of investors and make full use of high-quality personnel training capacity of FDI enterprises.
Prospects for FDI attraction
Vietnam has many advantages in investment attraction, for example, security and political stability, favourable geographic location for global trade, abundant labour force. Additionally, many foreign enterprises highly appreciate the business environment of Vietnam, with a constantly improving investment climate.
So, I am sure that foreign investors will continue to trust and choose Vietnam and see Vietnam as an attractive and potential investment market in the coming time.