Vietnam’s attraction of foreign investment last year was at a record level. However, most of the projects were small, and don’t belong to big or transnational groups. Why is Vietnam not drawing this type of investor?
It’s right that 2005 was a year for record foreign investment attraction since the regional financial crisis in 1997. However, there are still some problems, including the issue that you mention. The number of projects invested by transnational corporations is still small. There are around 500 corporations of this kind in the world but only 100 of them have invested in Vietnam.
Attracting investment from those corporations not only depends on Vietnam’s investment environment but also the investment policies of those companies. Transnational corporations often have economic influence on countries in which they invest because they have source technologies, strong financial capability and modern management skills.
Attracting investment by those corporations is significant for Vietnam and it is one of the policies the country is focusing on for 2006 and subsequent years. Investment by those corporations in Vietnam will bring about investment from other companies and their satellite firms as well, which can help develop supporting industries in Vietnam.
The MPI will submit a project to the government for attraction of investment by transnational corporations. Under the agreement on the common action programme signed between Vietnam and the European Union, the EU will assist Vietnam in drawing the investment of European transnational corporations.
Under the framework of the APEC meeting in May 2006, there will be a seminar discussing measures to lure transnational corporations, with the participation of foreign experts.
Vietnam’s goals this year are drawing foreign investment capital that is at least equivalent to last year’s level and implementing measures to further improve the investment environment. However, some projects are still struggling. Why?
Regarding investment promotion in Vietnam, our important target is how to make investors assured and want to do business for a long run in Vietnam, apart from creating an attractive environment.
One of the most important measures in attracting investment is dealing with problems faced by foreign investors. The MPI will take the lead in identifying and resolving problems faced by investors.
At present there are nearly 6,000 effective foreign-invested projects with total investment capital of over US$50bil. Of them, there are successful operations and those that face difficulties or are treading water. There are problems between investors and management bodies and some are among investors.
The problems between investors and state management bodies often rise after licensing, for example slowness in site clearance, land transfer and land compensation or unclear planning, or problems related to environmental regulations. For some projects, investors are incapable of meeting the scale of the projects.
Problems among investors are often related to economic interests and they often don’t sing the same tune. If they can’t deal with the problems and the MPI will act as a conciliator.
Around 20 projects are at serious situation. Those projects have existed for long and if the problems are not solved, waste of land and resources is available.
At the macro level we have the annual dialogue between the government and investors. At the local level, local departments of planning and investors will directly work with investors to help deal with difficulties.
For projects under the management of the MPI, the ministry will combine with related ministries and bodies to check and classify the problems of projects and find out measures for them.
This year the MPI will focus on projects in the two areas: education and real estate. However, I want to emphasize that to resolve problems for foreign investors, combined effort between ministries and sectors are necessary.
Obstacles related to administrative formalities still exist in some provinces and cities. Investors claim that it is very easy for them to get licences in some provinces while it is very difficult in others. Why is that?
The one-stop policy has been outlined for years under the administrative formalities reform programme, but one-stop does not mean that one agency can deal with every issue. Agencies can only offer cooperative efforts with other agencies to resolve issues associated with investors.
Nevertheless, not all provinces can offer such services. Cities like HCM City and Hanoi find it easy, while others do not. Naturally, there is a difference in the ease by which an investor can facilitate their project.
A decree on investment licenses and the combination between state agencies in licensing is about to be issued. In addition, provinces will be granted more power in licensing big projects. When they are given more power, they will have to set up suitable and united licensing mechanism towards the one-stop policy.

Source: VNECONOMY