Vietnam is having golden opportunities to lure foreign investors in the wake of the new trade deal adoption, but the government should streamline regulatory conditions further for the investment inflow to leverage the chances, expert suggested.
FDI in Vietnam is expected to increase in high-tech industries
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“We are already seeing growing interest in sectors including clothing and footwear, IT, agriculture and aquaculture, airlines, food and beverage, as well as healthcare. The trade agreements are advantageous to these sectors, and FDI should increase accordingly,” Otto said.
Sharing the same view, Dinh Thi Quynh Van, general director of consultancy, tax, and legal services firm PwC Vietnam, said with major trade deals like the CPTPP and the EVFTA, Vietnam has the potential to attract even more investment and generate new cross-border business opportunities.
A recent survey by PwC also showed Vietnam will continue to top APEC economies for -increases in cross-border investment this year with a net 46 percent of respondents planning to increase investments over the next 12 months.
Under the survey, the high rank is attributed to APEC business leaders’ confidence in revenue growth in the country. In particular, 33 percent of respondents in Vietnam indicated that they are ‘very confident’ of their companies’ short-term growth prospects, with another 48 percent being ‘somewhat confident.’
Equal treatment needed
With the current context, the experts believed Vietnam has a golden opportunity to streamline its laws and policies to make a leap.
According to Otto, basic improvements, including the reduction of unnecessary administrative burdens and increasing legal certainty, should be taken further.
“Vietnam should further boost confidence by easing unequal treatment of foreign investors, including foreign ownership limits and non-tariff barriers. Foreign investors would welcome simplified procedures for establishing companies, acquiring and selling ownership interests, paying taxes, as well as liquidating businesses,” he said.
Echoing Otto, Takimoto Koji, chief representative of Jetro in Ho Chi Minh City, also suggested that improvement of the business investment environment and administrative procedures is essential and activities related to the legal environment need to be clearer.
According to the experts, the ease of doing business should include the equal treatment of foreign investors. Under the WTO, the CPTPP, and other FTAs, businesses from other member states are in principle entitled to national treatment within a member state. This means that the members agreed to treat foreign and domestic investors equally.
“The ease of doing business in general and especially cross-border capital flows are essential factors as well,” Otto said, adding Singapore and Thailand, for example, have special incentives for setting up global and regional headquarters, and Vietnam should study the cases further.
To help facilitating administrative procedures, Otto suggested the country could further automate reporting, registration, and payment processes. Besides, the country could also incentivize more multinational corporations as well as startups to create their regional hubs in Vietnam, he said, forecasting with the right regulatory framework, Ho Chi Minh City could be an even more attractive location than others.
