Vietnam cannot take foot off pedal in FDI race: conference

By Minh Son, Anh Minh   October 4, 2018 | 06:17 pm PT
Vietnam cannot take foot off pedal in FDI race: conference
Employees working at a foreign direct investment (FDI) business in Vietnam. Photo by Reuters
Vietnam’s business environment has shown improvement but there is work to be done to attract more FDI, a conference heard.

Speaking at the “30 Years of FDI Mobilization” conference on Thursday, co-chairman of the European Chamber of Commerce (EuroCham), Nicolas Audier, said he has witnessed the evolution of the Vietnamese economy since the Doi moi economic reform was introduced in 1986.

The increasing foreign direct investment (FDI) has opened up the economy and improved economic policies. The business environment and the strong growth of the middle class would help Vietnam remain an attractive destination for foreign investors, he said.

EuroCham’s Business Climate Index for the second quarter released Wednesday showed a six-point jump from the first quarter.

Over 70 percent of European businesses reported a positive situation at their enterprise in the last quarter, with 62 percent describing it as ‘good’ and 12 percent as ‘excellent’, the survey said.

Boston Consulting Group managing director Christopher Malone said FDI is like a competitive sport in which Vietnam is a winning competitor.

But experts said there is space for improvement in the country’s business environment.

Tomaso Andreatta, co-chairman of the Vietnam Business Forum (VBF) Consortium, said the government needs to improve policies to help foreign businesses expand.

It needs to ease the burden of administrative procedures related to taxation and customs, cash payments should be prohibited and customs clearance documents should be archived to guarantee transparency, he said.

Small and medium-sized enterprises (SMEs) need its assistance as they lack resources and skills, he said.

Vietnam should strive to improve the quality and efficiency of its agriculture and technologies, he said.

Without improvements in technology and infrastructure in the power and transportation sectors, Vietnam won’t be able to attract new FDI, he warned.

Concurring with him, Malone said Vietnam needs to immediately get into the industry 4.0 innovation race since countries with a large domestic market and high technology would be the winners.

It should strive to become a “second home” for multinational companies, he said.

With protectionism increasing and trade tensions between the U.S. and China ratcheting up, Audier was concerned about the future of FDI in Vietnam.

These factors would put pressure on the country’s business environment and investment policy, he cautioned.

But Audier was confident Vietnam would become a more attractive destination for global capital flows if it continues to maintain its open trade policies.

In 30 years of opening up to FDI Vietnam has attracted over $344 billion from 129 countries, according to the Ministry of Planning and Investment.

Last year FDI companies accounted for 16.4 percent of its GDP.

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