Viet Nam targets more FDI with new legal framework. — Photo thongtinhethongphapluat.edu.vn

HA NOI (Biz Hub) — Viet Nam plans to improve its legal framework to create a favourable investment environment and help the state better manage these activities, said an official from the Ministry of Planning and Investment at a seminar in Ha Noi yesterday.

Since economic reforms began in 1986, FDI has played an important role in international integration and economic development, deputy minister of planning and investment Dang Tien Dong said at the seminar.

After Viet Nam entered the World Trade Organisation (WTO), FDI soared, but in 2011, registered FDI saw a year-on-year drop of 21.6 per cent to US$15.6 billion and disbursement of FDI reached only $11 billion – the same level as in 2010.

Registered FDI in 2012 saw a slight increase of 4.8 per cent to $16.35 billion while disbursement of FDI dropped to $10.46 billion.

There was a recovery in 2013 with total registered FDI of $22.35 billion, 36.7 per cent higher than in 2012. Disbursement of FDI also increased 9.9 per cent to $11.5 billion.

However, many experts said the recovery was not sustainable and growth in Viet Nam was lower than other regional countries. In the first four months of this year, FDI fell 41 per cent to $4.85 billion while disbursement of FDI continued to grow by 6.7 per cent to $4 billion against the same period last year.

Additionally, almost all FDI projects in Viet Nam are small and medium scale. FDI projects with capital of $100-500 million accounted for only 1.51 per cent of the total, while those with capital of between $500 million - $1 billion accounted for 0.19 per cent and those with over $1 billion accounted for barely 0.2 per cent.

Do Nhat Hoang, director of the Foreign Investment Agency, said that while Viet Nam had a strict licensing process for FDI, management of operations was not strict enough. Therefore, the country should reform administrative procedures, improve infrastructure, develop the support industry and focus on training a high-quality workforce, Hoang said.

Dong said Viet Nam faced challenges in wooing investors, competing with regional and global rivals and simplifying administrative formalities.

To improve the investment climate and State agencies' capacity to manage foreign capital, participants agreed that obstacles in the way of investment procedures should be examined.

Nguyen Anh Tuan, editor-in-chief of Vietnam Investment Review, said there were many issues when it came to enforcing the investment and enterprise laws, both promulgated in 2005.

Some articles were not concrete or suited to reality, while several regulations did not match international norms or the country's commitments to integration into the global economy, noted Tuan.

Director of the Central Institute for Economic Management Nguyen Dinh Cung said it was vital to restrict the withdrawal of business permits, adding that relevant agencies should only revoke the permits when necessary.

Chairman of the Viet Nam Association of Foreign Invested Enterprises (VAFIE) Nguyen Mai said that various difficulties in managing foreign direct investment (FDI) enterprises would emerge if regulations on the establishment of such firms, especially those related to fields of business and minimum capital, were not specified. — VNS