Vietnam further improves business environment

As member of bilateral and multilateral trade agreements, Vietnam has a lot of opportunities to improve its business environment and foreign investors, said Do Nhat Hoang, director of the Ministry of Planning and Investment’s Foreign Investment Agency.

Director of Foreign Investment Agency Do Nhat Hoang. Source: MPI.

Hoang was speaking at a virtual conference discussing Vietnam’s prospect as an attractive investment options held in Hanoi this week.

“This is particularly important given the fact that growing trade tension among major economies and the Covid-19 pandemic are forcing enterprises to diversify their supply chains and look for new investment destinations,” Mr. Hoang said. 

In the first 11 months of 2020, FDI commitments to Vietnam reached over US$26.4 billion, down 17% year-on-year, however, investment capital pumped into existing projects in Vietnam rose by nearly 8% year-on-year.

“This showed strong belief of foreign investors in Vietnam in the country’s prospect,” he added.

Mr. Hoang attributed Vietnam’s stable political environment, rapid economic growth, competitive production cost and a large workforce to the country’s status as an attractive investment destination.

With the participation in a number of free trade agreements, including the RCEP, EVFTA, and CPTPP, among others, Vietnam has preferential market access to 55 countries, including 15 in the G20, accounting for two thirds of the global GDP and three third of the world’s population, Mr. Hoang informed.

He said in the next phase of development, the country will give priority to high quality projects using modern technologies, which are environmentally-friendly and which support local firms to further integrate into global supply chains.

Preparing for next wave of investment capital

As a new wave of investment capital is coming, Vietnam is preparing land resources for the construction of new industrial parks, training high quality human resources and developing supporting industries, Mr. Hoang stated.

At present, the government is revising existing regulations for greater convenience for investors, while setting up a task force specialized in promoting foreign investment to Vietnam by advising the prime minister on new policies and mechanism on this issue.

A number of new laws, including the revised Investment Law, the revised Law on Enterprises, and the Public Private Partnership Law (PPP) has been recently ratified by the National Assembly, simplifying investment procedures and providing new incentives for projects in fields of innovation, research and development, among others.

Tax Partners of Ernst & Young Vietnam Robert King. Source: MPI.

At the conference, Tax Partners of Ernst & Young Vietnam Robert King said Vietnam has actively improved its infrastructure network to meet growing needs of investors, along with a more favorable legal environment for businesses.

This year, despite the severe Covid-19 impacts, Vietnam’s GDP growth is on track to hit 2 – 3% for this year, and  rebound to 6% in 2021. As a result, the country’s nominal GDP is estimated to reach US$340 billion in 2020, which results in a GDP per capita of US$3,500.

Vietnam is currently home to 32,000 foreign projects from 139 countries and territories worth US$383 billion, in which South Korea remains the largest investor, followed by Japan, Singapore and Taiwan (China).

Investors have poured money into 18 fields and sectors, in which manufacturing and processing led the pack with investment capital with nearly 60% of total registered capital.