Socialist Republic of Vietnam

HA NOI — Deputy Prime Minister Vu Khoan told ministries and regions to improve the country’s foreign investment environment or risk falling behind the rest of Asia.

Addressing a conference on Monday, Khoan said to reach Viet Nam’s target of 8 per cent GDP this year, the country needed more foreign direct investment (FDI).

"At present, Viet Nam’s investment environment and policies are much better than they were in the 1990s," said Khoan.

"However, to attract more FDI, we must create more favourable conditions for foreign investors as other Asian countries have better FDI conditions than Viet Nam," he stressed.

At the 2004 FDI Conference, the Deputy PM said planning for future investments should be along regional lines, such as northern, southern and central regions, not divided into provinces and cities as is done at present.

He told the conference the Government would not accept enterprise monopolies and the Ministry of Planning and Investment (MPI) should prevent public sector monopolies.

The Deputy PM urged the MPI and other ministries to consider policies to meet requirements for the country’s accession to the World Trade Organisation.

"Before they are released, policies should be formulated from the opinions and consensus of ministries, enterprises, provinces, and associations," he said.

Khoan called on relevant ministries to fast-track the planning of industrial parks.

"In addition, the list of preferential projects calling on FDI must be updated and defined," he said.

He asked authorised bodies to focus on personnel training, in particular directing training programmes at providing a skilled workforce for foreign invested enterprises (FIEs).

Khoan called for investment promotions for business, trade and tourism to combine, suggesting the establishment of an investment promotion fund.

At the conference, deputy planning and investment minister, Nguyen Bich Dat, said the MPI and other ministries were working on a strategy to 2010 to attract and use FDI capital, as well as submitting to the Government a comprehensive nationwide FDI list for the next five years.

"Ministries and sectors must finalise their plans to phase out the distinctions between domestic investment and FDI to encourage the FDI sector in more areas," Dat said.

Dat told the conference that by the year end, relevant ministries would draft an investment law applicable to both the domestic and foreign investment sectors and submit it to the National Assembly.

He said by May, the MPI and finance ministry would submit two amended decrees for corporate income tax and value-added tax to reduce obstacles for enterprises.

Dat added the Ministry of Labour, Invalids and Social Affairs would compile a decree to ease restrictions on the number of foreign employees for certain enterprises, in particular businesses operating in high-tech, education and training, and health sectors.

The construction and natural resources and environment ministries are being asked to amend regulations governing foreign investment in property.

"Foreign investors may be allowed to lease land from the private sector under a pilot project under consideration."

In the second quarter of this year, the Finance Ministry would promulgate preferential tax policies for foreign-invested enterprises that convert to joint-stock companies, Dat added.

According to the MPI, in the 16 years since the Foreign Investment Law was enacted, about 5,400 FDI projects have been licensed, of which 4,376 are still valid with a total registered capital of US$41 billion.

From 1988 to 2004, revenue from FIEs hit nearly $70 billion (not including oil and gas), with an export turnover of $26 billion.

With average high growth of more than 20 per cent each year, FIEs share of the country’s export revenue increased to 24.4 per cent in 2001, 27.5 per cent in 2002, and 31.4 per cent in 2003.

Since 1988, the FDI sector has created direct employment for 665,000 people and more than 1 million indirect jobs. — VNS