VietnamCredit About Us Cafe€redit Contact Us
Go to cart
Vietnam needs to have appropriate policies to attract high-quality FDI from the EU

Vietnam needs to have appropriate policies to attract high-quality FDI from the EU

Thursday 27, 08 2020
The EU is currently the third-largest trading partner and also one of the two largest export and export markets of Vietnam. The EU is also a major investor in Vietnam, with a total registered investment capital of more than $25 billion.

It can be said that the EU business community has long considered Vietnam as a priority investment destination in the region. In the years 2000 - 2001, FDI from the EU became an important source of investment for Vietnam, accounting for about 38% of the total value of registered FDI. In particular, after Vietnam joined the WTO, registered FDI from the EU soared from 5.41 billion USD in 2007 to 10.49 billion USD in 2008, or up 93.89%, and accounting for 16.4. % over 64 billion USD of total registered FDI capital for the whole year 2008. With 1.88 billion USD of total newly, additionally registered capital and capital contribution and share purchase in 2018, in total, the EU currently has nearly 25 billion USD of more than 2000 valid FDI projects in Vietnam. Netherlands, France, Luxembourg, Germany ... are the group of most investors in Vietnam among EU member countries. The highlight of FDI projects from the EU is that most of them are of high quality, typically projects investing in high technology from corporations like Ericsson, ABB, and Bosch. Furthermore, European investors are considered to be stronger in services than in goods production, so in the context of the changing production value chains, the reception of FDI from the EU becomes more and more popular. should be important for both Vietnam and the EU countries.

 It can be said that the EU business community

In particular, the EVFTA Free Trade Agreement and the EVIPA Investment Protection Agreement as comprehensive and high-quality, balanced interests for both Vietnam and the EU, are consistent with the of the World Trade Organization has been signed. The contents of the EVIPA Investment Protection Agreement include a commitment to grant national and most-favored-nation treatment to investor investment on both sides, with some exceptions, as well as public treatment. Equal, satisfactory, safe, and complete protection, allows the freedom to transfer capital and profits from investments abroad, commit not to expropriate or nationalize investors' assets without satisfactory compensation. It is worthwhile, committing to compensate the other party's investor for the same appropriate damage as a domestic investor or a third party in case of damage caused by war, riot ... basically protected get the benefits of investors. If it complies well and meets the EVIPA conditions, Vietnam will not only attract FDI inflows from Europe, but also from many other partners outside the EU. In other words, EVIPA and EVFTA are expected to be and continue to create a positive impetus for both enhancing Vietnam-EU trade, as well as attracting high-quality FDI from the EU into Vietnam.
The process of attracting FDI in general and from the EU, in particular, has contributed to supplementing the driving force for economic growth, increasing state budget revenues, promote the process of economic restructuring according to the development model based on modern technology, high knowledge content, create jobs and improve income for millions of workers. However, FDI capital from the EU has not been exploited as expected. EU enterprises often find it difficult to invest in fields that they have strengths, due to many restrictions on transparency and advantages in procedures in particular and in general state management of FDI, as well as requirements for quality of labor training and infrastructure conditions ... Moreover, before EVIPA comes into effect, the principle of dispute settlement through arbitration mechanism makes EU investors feel riskier when investment because they often focus on legal terms. The dispute settlement principle through the two-level standing mechanism specified in EVIPA will create confidence for EU businesses to invest in Vietnam. In addition, European investors in general still lack information about the Vietnamese market. From issues relating to policy mechanisms, labor rights and social responsibility, environmental protection and sustainable development, to automotive accreditation, and excise tax on products such as beer, wine. This is not only the issue of information promotion but also the differences in management mechanisms and policies that have somewhat discouraged investors.
Therefore, the Government of Vietnam has asked the World Bank Group to support the development of strategy and strategic direction for attracting new generation of FDI for Vietnam in the period of 2018-2030. The main highlight of the "new generation FDI attraction strategy" is the shift of focus from attracting the right investors for Vietnam's "product" to developing suitable products (ie, business environment. and suitable investment conditions) for the type of investment that Vietnam needs in the future, thereby maximizing the spillover effect and value-added of FDI. In particular, in order to increase the attraction of high-quality FDI from the EU to Vietnam in the coming time, some outstanding solutions need to be implemented as follows:

  1. Improving the quality of the institutional environment, planning, advertising and promoting FDI

1.	Improving the quality of the institutional environment, planning, advertising and promoting FDI

FDI inflows from the EU are a major driving force for Vietnam's administrative procedure reform. This stems from the fact that EU businesses generally attach great importance to the rule of law and have very strong institutional quality requirements. Therefore, in the spirit of Resolution 50-NQ / TU, the State not only respects and protects the legitimate and legitimate rights and interests of investors; ensure the harmonization of interests between the State, investors, and employees in enterprises, but also promote the process of building and perfecting foreign investment institutions and policies in line with development trends, approach international advanced standards and harmonize with international commitments, ensure consistency, consistency, openness, transparency and high competitiveness; Creating a business environment and competitiveness of the ASEAN 4 group before 2021, the ASEAN 3 group before 2030. Accordingly, departments need to coordinate in drafting and synchronizing the legal system and management. is completed according to international standards. In particular, the tasks of the agencies attached to the Government are to quickly complete the institution, policies, and laws on business investment, including foreign investors related content. This is also a factor that enhances Vietnam's institutional competitiveness and business environment, especially in the context that international investors are constantly looking for new markets outside of China. The superior legal foundation will inspire investors to believe and commit to long-term investment.
In the coming time, it is urgent to review and complete the national master plan on FDI attraction, with the priority orientation to attract FDI projects with high added value, advanced technology, modern governance, and linking global supply chains and having a spillover effect; Organic integration with the domestic economic sector, in line with the process of economic restructuring and growth model innovation, improving the quality, productivity, and competitiveness of the economy, and ensuring the spend sustainable development, protect the environment and social justice. This is the central content that should be disseminated and widely advertised to the business community not only of Vietnam but also of the EU. The FDI promotion agency needs to be specialized and provide a portfolio of investment attraction projects suitable to the needs of EU businesses, especially in their forte, processing industry. , manufacturing using high technology, clean energy, renewable energy, high-quality services, financial services, banking and telecommunications, transportation, distribution ...
In order to reduce the geographically uneven distribution of FDI projects, the investment incentives should avoid creating too big a gap between foreign investment attraction centers and struggling provinces. Amending and supplementing regulations on investment procedures, conditions, concepts of investment activities, the list of geographical areas, fields, and subjects eligible for investment incentives in the investment laws foreign countries and relevant laws to ensure consistency in implementation and compliance with Vietnam's international commitments. In addition, it is necessary to build institutions, outstanding preferential policies, an international competition to create favorable business conditions to attract large, national key projects, high-tech projects ... attract strategic investors, multinational corporations to invest, set up headquarters, and set up research and development (R&D) centers, innovation centers in Vietnam. To build appropriate incentive and incentive mechanisms to increase the link between foreign investment and domestic investment, and priority areas to be attracted; developing industry clusters and value chains, contributing to enhancing domestic value-added, product competitiveness and national position in the global value chain. Encourage technology transfer and governance to Vietnamese businesses. To adopt incentive policies for foreign-invested enterprises to train and improve skills and qualifications for Vietnamese workers; employing Vietnamese workers who have worked and trained in advanced countries. To study and formulate a preferential mechanism to attract foreign investment in infrastructure development for the Northern mountainous areas, the Central Highlands and the Mekong River Delta.
It is necessary to help businesses and workers from the Northern mountainous provinces and the Central Highlands to access support programs and resources from the EU because EU investors themselves are always interested in this issue. to eliminate social inequality and poverty.

  1. Strictly punish or prevent low-quality FDI projects

The authorities need to study and develop regulations to overcome the situation of "thin capital", transfer prices, "underground" investment, and "shadow hiding" investment; supplementing the provision on "national defense and security conditions" in the process of considering and issuing investment registration certificates (or documents of equivalent legal validity) for new and submitting for consideration and approval for investment activities through capital contribution, share purchase, capital contribution. Concretely elaborate a list of limited and non-attracting foreign investment in accordance with international commitments; Outside of this list, foreign investors are treated equally as domestic investors. To formulate investment criteria to select and prioritize investment attraction in accordance with the planning and development orientations of branches, domains, or localities. Develop a security assessment mechanism and conduct security reviews of foreign investment projects and activities that have or may affect national security. Develop and supplement incentive mechanisms for businesses operating effectively, well-implementing commitments; To distinguish preferences between different investment branches and trades. To adopt policies to encourage cooperation and technology transfer on a voluntary and agreement basis. Applying investment incentives associated with meeting specific conditions, commitments, and post-check mechanisms, claiming reimbursement when violating commitments. Raising product standards and technical regulations, protecting the environment, natural resources, and saving energy in line with regional and international standards. Do not consider expanding or extending operations for projects using outdated technology, potentially causing environmental pollution and resource-intensive. Amendment and supplementation of provisions on ensuring rights and obligations, recognizing and protecting legal ownership of assets, intellectual property rights, invested capital, income, and other legitimate interests of investors and related entities, in accordance with international commitments. At the same time, there are sanctions to strictly handle violations. Amend and supplement legal provisions on labor, employment, and wages, ensuring the harmonization of interests of employees and employers towards transparency, meeting international integration requirements. Clearly stipulating responsibilities of infrastructure investors, foreign-invested enterprises in the construction of social housing, housing for workers, kindergartens, medical, cultural, sports facilities ... workers. Clearly stipulating the responsibilities of investors for environmental protection during investment, project implementation, and enterprises' operations throughout the project implementation period in accordance with the law. Reviewing and completing antitrust regulations in line with international practices; meeting the conditions for economic concentration under the competition law; on national defense and security assurance when foreign investors, foreign-invested enterprises contribute capital, purchase shares, merge or acquire enterprises in Vietnam. To formulate the Law on Anti-Transfer Pricing and a specialized agency to control, manage, and prevent transfer pricing right from the moment of establishment and during the operation of foreign-invested enterprises. Develop mechanisms to prevent and resolve problems, complaints, and complaints of investors. Improve the quality and efficiency of dispute settlement and enforcement institutions. Completing laws to effectively resolve problems with projects with a commitment to the non-refundable transfer of assets of foreign investors to the State or Vietnamese party after completion of operation and handling of in the event that a foreign investor is absent or flees during the implementation of investment activity in Vietnam.
It is strictly forbidden to issue, adjust, manage, negotiate foreign investment projects, promulgate regulations on investment incentives, support ... in contravention of competence, against the law. The negotiation and agreement on government guarantee commitments (GGU), signing BOT contracts, consumption of products ... must comply with the law. To rectify the management and implementation of investment projects, ensure economic - social - environmental efficiency, conform to the planning, according to the selection criteria, project screening ... strict on the process and procedures for the grant, adjustment, withdrawal, and termination of foreign investment projects in accordance with the law. Strengthen inspection, supervision, and inspection associated with enhancing the accountability of local governments and leaders in observing the Party's guidelines and policies and State laws related to foreign investment. Completely handle projects that pollute the environment, use land ineffectively, have lost business for many years, and projects fail to comply with commitments. Preventing and settling early and effectively disputes related to foreign investment.

  1. Improving infrastructure conditions, the quality of human resources and developing other investment support services

Domestic businesses need to actively research and approach EU businesses to understand and meet partners' needs ..
Infrastructure investment is a crucial factor in attracting FDI from the international market in general and the EU in particular. In particular, young human resources with great internet use skills, data analysis, information technology skills, and a quick grasp of new technology trends ... are advantages that need to be further promoted to attract moreover, capital from the EU. Timely issue regulations governing new economic relations, new business models, and methods ... to facilitate investment and business activities of investors and management activities of the agency. government. Making public and transparent socio-economic information systems, laws, policies, planning, plans, markets, ... Strengthening the dialogue mechanism, innovating, and expanding the mode of receiving comments. recommendations and reflection of investors; settle difficulties and problems related to on-going projects in a timely and timely manner.
Complete the database system and national information on investment that is synchronous and linked with the fields of labor, land, tax, customs, credit, foreign exchange ... and localities. Improving the quality of statistics, ensuring timely, complete, accurate, and consistent with international practices. Closely coordinate with business associations and international organizations to improve the quality and efficiency of the voting and honor of foreign-invested enterprises; periodically vote, honor typical foreign investors …

Complied by Vietnam Credit


You may also like

Vietnam: The importance of risk management
Saturday 11, 01 2020

Vietnam: The importance of risk management

Due to multiple factors, foreign investors are choosing Vietnam as their...
​Attracting FDI to Vietnam through M&A deals
Thursday 06, 02 2020

​Attracting FDI to Vietnam through M&A deals

The America-China trade conflict is making foreign investors invest in...
+84 981861066