New Strategy Targets Breakthrough in FDI Attraction

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Oct. 11 – The Vietnamese Ministry of Planning and Investment (MPI) is currently working on a new strategy to boost the attractiveness of the country in terms of foreign direct investment (FDI) inflows. A significant shift in FDI’s role in the country will be the main issue the new strategy is aiming at and the socio-economic development plan will have a long term prospect covering the 2011-2020 period.

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By analyzing the statics, the Vietnamese business environment has been recently underpinned by a good amount of FDI inflows. Foreign investors disbursed about US$950 million in Vietnam last month, raising a total net foreign direct investment of US$8.2 billion from January to September (2011), up 2 percent year-on-year.

“FDI inflows into Vietnam are still very positive,” said Do Nhat Hoang, director of the Ministry of Planning and Investment’s Foreign Investment Agency. Hoang believes FDI disbursement could reach US$11 billion by the year’s end; forecasts that have been widely supported by commitments of investors such as Panasonic Corporation, AES Corporation, Posco Power, Jaks Resource and First Solar.

Although the General Statistics Office reported a slowing down in GDP growth in the first nine months of this year (5.76 percent against 6.52 percent in 2010), Vu Dinh Anh, an economist at the Institute for Market and Prices, said that “overall, foreign investors are still confident in Vietnam’s long term prospects and will continue investing here.”

However, in order to preserve sustainable and steady growth and increase the quality of FDI flows, Vietnam has reached a point where it needs to be more selective, according to Do Nhat Hoang.

The same opinion has been shared by both Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI) and The Central Institute of Economic Management which recently put emphasis on the need to implement a number of solutions to improve the quality of FDI flows.

First of all, priorities will be provided to public-private cooperation and areas which are expected to generate higher added values, such as production and manufacture. A survey conducted by the VCCI highlights the issue revealing that only 13.5 percent of undertaken FDI is operating in the fields that have just been mentioned above.

Moreover, the draft strategy also places emphasis on environmental issues to advance towards sustainable development. Vietnamese standards on environmental protection are still low and according to Nguyen Duc Thang, MPI’s expert on environment and sustainable development, one of the main reasons why Vietnam is still not completely dubbed a “paradise for investment” is the lack of a well-enforced environmental protection laws.

“If the present situation continues, it will pose great risks for the future,” Thang warned.

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