Keeping with the Confucianist trend, Vietnam has been declared the 6th most attractive country for FDI (foreign direct investment) by the UN. Seems like Vietnam finally “got its groove back”. From my reading, there still needs to be more work done on privatizing and simplifying the legal structure, still they are making good progress. I would say that Vietnam needs to continue to focus on niche industries in order to be competitive with China due to their lower level of infrastructure and smaller economy of scale, which is the direction they seem to be headed; quite impressive.
–UN report analyzes FDI in Vietnam
Secretary-General Supachai Panichpakdi of the United Nations Conference on Trade and Development (UNCTAD) quoted his agency’s recent survey on Tuesday, saying that Vietnam was the sixth most attractive location for foreign direct investment (FDI) over the 2007-2009 period.
At a seminar in Hanoi where UNCTAD’s draft Investment Policy Review was introduced, Panichpakdi said Vietnam was a bright spot on the world’s investment map.The review, which will be finalized and issued at UNCTAD headquarters in Geneva, contains practical policy suggestions based on UNCTAD’s experience in the country and in-depth knowledge of investment policy around the world.
FDI has helped the country sustain strong economic growth, which is expected to reach 8.5 percent this year and nine percent in 2009, said Panichpakdi.
However, Panichpakdi said the government should shift its investment strategy from supporting export-oriented production to other fields, such as telecommunications, electricity, transport and education.
He pointed to Intel Corp.’s decision early this year to invest over US$1 billion in Vietnam as an example.
A suitable and uniformed market liberalization strategy was required to attract foreign investors in the new fields, he said.
Panichpakdi suggested that Vietnam begin designing and implementing a master plan to attract and receive an even larger influx of FDI.
Vietnamese statistics showed that Vietnam had received some $70 billion in FDI over the past 20 years.
The country’s total this year is expected to top $16 billion.
FDI enterprises make up 30 percent of total industrial production and 18.1 percent of employment in the country.
Panichpakdi attributed the success to Vietnam’s transformation into a market economy while opening its doors to foreign investment.
Recently-issued laws showed that Vietnam is integrating into the global economy, especially after its accession to the World Trade Organization, he said.
Foreign investors’ feedback on Vietnamese investment policies have been positive, he added.
John Hendra, the UN Resident Coordinator for Vietnam, said the review came at “a very opportune time” and would be useful to the Vietnamese government in assessing trade and investment policies in preparation for the formulation of the new five year plan and the new ten year National Development Strategy.
UNCTAD RECOMMENDATIONS FOR VIETNAM’S FDI POLICY
1. Shifting the government’s approach from directing and controlling to regulating, supervising and ensuring implementation.
2. Diversifying investment areas beyond export-oriented production.
3. Facilitating training and ensuring skills necessary for the economy.
4. Making a clear distinction between the government’s ownership and its regulative function.
5. Simplifying the tax system and enhancing the preferential tax mechanism, making the tax system more attractive to foreign investors.
6. Absorbing and implementing legal changes in a healthy way
Story from Thanh Nien News
Published: 20 December, 2007, 14:12:16 (GMT+7)
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