Amid declining foreign direct investment in Vietnam, Prime Minister Nguyen Tan Dung has again urged relevant governmental agencies to enhance the appeal of the country’s investment policies.
Dung, in a direction released on December 7, asked the Ministry of Planning and Investment (MPI), to “promptly” submit to the government a draft decree on the list of areas and industries that should enjoy favourable investment incentives.
He also urged the MPI to study an attractive and competitive incentive policy to attract more foreign direct investment (FDI), aiming to attract big projects from multinational companies.
Meanwhile, the Ministry of Industry and Trade, the Ministry of Finance, the Ministry of Construction, the Ministry of Natural Resources and Environment and State Bank of Vietnam are also under instructions to promptly review legal regulations related to land, manufacturing industry development, finance and banking and construction to remove all obstacles faced by foreign investors when doing business in Vietnam.
Dung’s instruction at this time reflects the Vietnamese government’s determination to improve the investment climate, especially when more and more foreign investors are complaining about the slow pace of policy changes in Vietnam.
“Over the past years, FDI in the country has not yet reached effectiveness as expected, and have not yet created an essential motivation to spur the nation’s economic growth,” Dung said.
In order to ensure that the instructions will be seriously implemented, Dung entrusted the MPI to review the implementation of his direction. Ministries and cities’ and provincial people’s committees are required to make progress reports to him every three months.
Pledged FDI in Vietnam has been declining since 2009, after peaking at $71 billion in 2008. The MPI’s Foreign Investment Agency reported that new FDI commitment this year to the end of November in the country reached $12 billion, down 21.4 per cent year-on-year.
Even though the nation’s FDI disbursement is expected to stand at around $11 billion this year, the same to last year, the decline of FDI commitment means that inflows into Vietnam in coming years will reduce.
“The Vietnamese government is really worried about the decline of FDI. This is an important thing to the economy when we reduce public investment and domestic private investment is very low,” Dao Quang Thu, Deputy Minister of Planning and Investment, said in a meeting with representatives from ministries and provinces at the MPI to discuss the measure to prevent FDI commitment decline.
Vu Dai Thang, director of the MPI’s Economic Zones Management Department, pointed out FDI incentive policies in Vietnam had been less attractive during the past six years as the government revised a series of laws and legal regulations.
He cited the current Law on Corporate Income Tax, which does not allow foreign investors investing in industrial parks to enjoy tax incentive like it did before 2009.
“Our incentive policies are less attractive than Thailand, Indonesia or Malaysia. Therefore, the decline of FDI is understandable,” said Thang.
Murakami Daiken, chairman of the Japan Business Association in Vietnam, said to attract new FDI, Vietnam had to win the competition with its rivals.
“Thus the Vietnamese government needs to establish a better business environment,” said Daiken, who is also general director of Showa Denko Rare-Earth Vietnam Company.
Nhu Ngoc | vir.com.vn
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