Published:  08:46 Saturday - October 20, 2012

The current investment environment is one of the biggest challenges to the attraction, utilisation and management of Foreign Direct Investment (FDI). It needs improving in the first place.

The Ministry of Planning and Investment (MPI) is drafting a project to improve the effectiveness of attracting, utilising, and managing FDI inflows until 2020.

In order to make the project successful, experts propose identifying and making up for shortcomings in strategic plans and orientations.

Judging from poor management and implementation capacity, they demand top priority be given to improving the investment environment.

Many Japanese businesses admit that they are still in two minds about investing in Vietnam, even though they wish to be less dependent on the Chinese market.

According to MPI Minister Bui Quang Vinh, Vietnam cannot attract more foreign capital unless the investment environment becomes healthier.

Ngo Sy Bich, head of the Bac Ninh provincial Management Board of Industrial Zones, says some project managers are unable to make clear what they are going to do with funding from FDI sources.

No doubt, this has caused concern among foreign businesses who plan to invest in the country.

A Japanese business leader complains that his company has tyre-making factories in two different provinces and they are charged with different rates of tax.

Many German businesses say they have had to wait for months to receive their investment licenses due to a complicated process that requires too many documents, even seemingly unnecessary ones.

Overlapping regulations on FDI management are putting a damper on many foreign business operations in the country. For example, a Nokia factory management in Bac Ninh province has had to spend months asking for its recognition as a high-tech business to enjoy a preferential corporate income tax.

Even worse, some foreign businesses have to get around the law when they want to see their new projects get off the ground on schedule.

Improving the investment environment is no novelty as the Vietnamese government has gone to great lengths to do it.

Do Nhat Hoang, Director General of the MPI’s Foreign Investment Agency, says although Vietnam is considered an attractive destination, Japanese business investment in Thailand is still three times larger than in Vietnam. He puts this down to Thailand’s better investment environment.

Hoang underscores four main principles as the key to attracting FDI inflows, namely harmony between policy and law, effective use of capital at all levels, competitive incentives, and significant improvement in the investment environment.

VOV online