At a seminar on FDI quality improvement held in Hanoi yesterday, JV Raman, chairman of Unilever Vietnam, profusely praised the domestic investment environment. 

The group is one of the first foreign investors in Vietnam, he said, and after 15 years of operation in the local market, its revenue is now equivalent to 1% of Vietnam’s gross domestic product (GDP), with 10,000 people employed and over US$300 million invested.

There are 30 million people using Unilever products a day, he said, adding his company’s success is associated with the country’s sustainable development.

Unilever is a typical example of Vietnam’s success in attracting foreign investment capital over the past 25 years since the renovation policy was adopted by the Sixth Party Congress in December 1986.

“Without FDI, the nation’s economy must have stood at about a meager growth rate of 3-4% annually for the last 25 years,” said Professor Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises.

Mai pointed out that a number of provinces had enjoyed staggeringly growing budget revenue thanks to FDI attraction only. He cited the case of the northern province of Vinh Phuc as an example.

In 1997, the budget revenue of Vinh Phuc stayed at over VND100 billion but the figure shot up by 140 times, to an impressive level of more than VND14 trillion last year, largely owing to FDI.

From 2006 to 2010, the State budget revenue collections from foreign-invested firms reached over US$10.5 billion, at an average year-on-year rise of some 20%, said Do Nhat Hoang, head of the Foreign Investment Agency under the Ministry of Planning and Investment.

In 2011, this economic segment contributed US$3.5 billion to the State budget, exclusive of the amount from crude oil.

According to Minister of Planning and Investment Bui Quang Vinh, FDI capital on average has made up around 18% of GDP and 56% of the total export value of the nation over the past 25 years.

“FDI has significantly motivated the nation to restructure the economy and has created favorable conditions for the development of local companies,” Hoang commented.

“The local Government highly valued the role of FDI capital during the last 25 years,” he said.

Challenges ahead, for investors and for Vietnam

However, foreign investors also lamented about what has discouraged them so far. Khalid Muhmood, co-founder of Apollo

Education and Training and the British University Vietnam, attributed the current overwhelming presence of inefficient laws to the difficulties of investors undergoing related procedures.

Under the current circumstances, his organization’s daily business is badly affected, he stressed.

He explained that laws are in several cases overlapping, or simply there are too many regulations.

Hirokazu Yamaoka of the Japan External Trade Organization (JETRO) cited the concerns of Japanese investors over the severe shortage of local power supplies, as well as other macroeconomic issues in Vietnam.

Among Japanese investors paying attention to the 1,870-kilometer expressway project in 2020, some of them are still afraid of risks of the project under the format of public-private partnerships (PPP), he said.

Besides, the JETRO representative suggested the Government stabilize foreign exchange rates, trade balance, prices and salaries as these factors would influence investment decisions of investors.

To lure FDI capital, Vietnam in fact is facing the tough competition with heavyweight rivals in the region like Thailand and Indonesia. Yamaoka noted that Japanese investment into Thailand over the past four years totaled US$13.3 billion compared to only US$5.3 billion committed in Vietnam. He urged the Government to take more suitable measures to strengthen its competitiveness in comparison with the two neighboring countries.

Source: SaigonTimes.