10:05 | 08/12/2015 Economy
(VEN) - Foreign direct investment (FDI) is making a strong impression as all newly-registered, supplementary and disbursed capital has increased. Vietnam Economic News’ Nguyen Hoa spoke with Nguyen Van Toan, Deputy Chair of the Vietnam Association Foreign Invested Enterprises, to take a closer look at the impact of the FDI sector in Vietnam.
What are your comments on FDI attraction in the first 10 months of this year and the goal of US$22 billion in FDI for the whole year?
Vietnam attracted 1,657 new FDI projects with total registered investment capital of US$12.42 billion in these months, a 26.9 percent increase from the same period last year in number of projects, and a 24.8 percent increase in terms of registered capital. In addition, 667 ongoing FDI projects increased their capital by US$6.866 billion, a 42 percent increase in number of projects and an 83 percent increase in terms of registered capital. Including both new and supplementary FDI capital, the country attracted US$19.3 billion, a 40.8 percent increase, accounting for 87.7 percent of the annual target. Disbursed FDI capital reached US$11.8 billion, a 16.3 percent increase.
The increases show positive change both in terms of quantity and quality of FDI, and the goal to attract US$22 billion in FDI by the year-end is feasible.
Why did FDI improve so much?
Apart from major reasons such as low labor costs, stable politics, the big population and the large market, FDI attraction was supported via positive change in the investment environment as a result of the amendments of the Enterprise Law and the Investment Law, which were adopted in November 2014 and took effect on July 1, 2015.
The amended Enterprise Law has created a breakthrough since it allows companies to register an unlimited scope of business and to change business areas without re-registration. The amended Investment Law abrogates investment examination procedures and reduces the investment registration duration from 45 days formerly to 15 days currently. The number of prohibited business areas has also reduced from 51 formerly to 6 currently, greatly attracting foreign investors in Vietnam.
In addition, Vietnam is deepening international economic integration via concluding a free trade agreement (FTA) with the Republic of Korea and the Eurasian Economic Community and completing an FTA with the European Union and negotiations of the Trans Pacific Partnership (TPP) Agreement, helping increase Vietnam’s attractiveness to foreign investors. Several big-name businesses such as Vinamilk, Bao Minh and FPT have also withdrawn capital from several subsidiaries creating an important impetus for increased FDI in the first 10 months of the year.
What areas do you think FDI attraction should focus on in the near future?
I think the quality of FDI is really important. So, FDI attraction in the short term should focus on projects of big groups which will apply environmentally-friendly technology and will have a positive impact on domestic enterprises. This also means the country should refuse outdated-technology, environmentally-polluting projects and those coming to Vietnam to take full advantage of low labor costs.