Socialist Republic of Vietnam

Radio Voice of Vietnam

The Ministry of Planning and Investment (MPI) has proposed a score of measures to further attract foreign direct investment (FDI) and improve the investment environment at a conference in Hanoi on Monday.

According to a report delivered by Deputy Minister of Planning and Investment Nguyen Bich Dat, by 2003, Vietnam had licensed more than 5,400 FDI projects, of which 4,376 are currently operational, totalling US$41 billion. Industrial parks and export processing zones attracted about 1,400 FDI projects, capitalised at US$11.15 billion.

Although total capital for new projects reduced in recent years, operational projects increased their capital by another US$9 billion. Between 2001-2003 alone, the increase was nearly US$3 billion, accounting for nearly half the total capital value of newly registered projects.

Foreign invested businesses also grossed revenue of nearly US$70 billion, (excluding crude oil), and export value of US$26 billion. Currently, foreign investment accounts for 36.2 percent of the country’s industrial production value.

However, Dat pointed out some weaknesses in attracting foreign investment capital, including improper capital mechanism, and untapped potential. Investment from developed countries having high-tech industries such as Japan, the European Union and the Unites States flowed slowly, while the number of bankrupt projects was rather high, making up 20 percent of total licensed projects.

Sharing Dat’s view, Deputy Prime Minister Vu Khoan asked MPI to devise measures to remove obstacles for foreign investors, relating to tax policies, customs and administrative procedures.

MPI should make proposals to the Government for consideration and adjustment to facilitate foreign investors’ activities, but in line with Vietnam’s international integration process, Khoan said.

MPI proposed seven major measures to further attract and use foreign investment capital effectively. They include materialising the Party’s viewpoint on enhancing foreign investment, considering the source an important part of the national economy; and formulating a strategy for attracting and using foreign investment till 2010 in conformity with the country’s socio-economic development plan. The Ministry emphasized the need to finalise the legal system and policy on foreign investment, continue to reduce investment expense, and enhance the State management capacity, as well as investment promotion.

Vietnam aims to attract US$3.3 billion in Foreign Direct Investment (FDI) capital this year and US$12 billion during the 2001-05 period.
According to the Ministry of Planning and Investment, Vietnam has 4,300 valid foreign-invested projects capitalised at a total of US$40.7 billion. Of these, nearly 3,000 projects are operational. The foreign-invested sector accounts for 20 percent of the country's total investment capital, 31 percent of total exports, and 14.3 percent of GDP. The sector also generates tens of thousand of jobs for locals.

The Foreign Investment Department said that in the first quarter of this year, FDI capital reached over US$710 million, up 25 percent against the same period of last year. The leading provinces in attracting FDI are Binh Duong with US$204 million and Dong Nai with US$125 million, both in south Vietnam.

Mr Le Viet Dzung, deputy head of Binh Duong Department of Investment and Planning said in general FDI capital in the first quarter is higher than the figure of the same period last year, however most are expanding capital, injecting around US$178 million.

Dzung added that FDI this month should decrease due to some changes in tax policy under Decrees 158 and 164. The situation will mostly affect Industrial and Processing Zones in Ho Chi Minh City, Tay Ninh and Dong Nai.
The Tax Bureau has proposed the Government remove these obstacles to retain preferential policies toward FDI projects.

Deputy Minister of Investment and Planning, Nguyen Bich Dat, said the ministry has proposed the government to resolve the problem and hoped that these obstacles would be removed soon.