Last updated: Monday, April 24, 2017
EU Wants to Become No.1 Investor in VietnamPosted: Wednesday, April 12, 2017
The European Chamber of Commerce in Vietnam (EuroCham) was founded in 1998 with a modest group of 60 member companies. Up to now, after 19 years, EuroCham's membership has reached 950, becoming one of the largest European chambers of commerce in Southeast Asia. In addition to supporting European businesses, EuroCham has also made very positive contributions to the Government of Vietnam to improve the competitiveness of the investment environment in recent years.
Bruno Angelet, Head of Delegation of the European Union to Vietnam, said that Vietnam’s recent economic achievements prove that reforms adopted by the Government of Vietnam have worked and, above all, actively supported the investment environment in Vietnam. Its aspiration to become a full member of the international economic system is becoming true.
Inflation growth restrained at a single-digit rate, macro policies reasonably executed, and a good business environment are pluses in the eyes of investors. These are reasons for the high FDI flows into Vietnam in recent years.
He affirmed that European investors have a high demand for information about Vietnam's market. EU investment in Vietnam has kept rising and the EU wants to become No.1 investor in Vietnam. This will become true when the EU-Vietnam Free Trade Agreement (EVFTA), signed by two sides, takes effect in 2018.
Policy improvements are helping Vietnam to draw the attention of investors. But according to European businesses operating in Vietnam, administrative system and legal policy issues still need to be addressed.
According to EuroCham's survey, what concerns foreign investors most in studying and investing in Vietnam is administrative system. Tax declaration, customs clearance, business registration and administrative procedure settlement remain slow, resulting in unpredictable progress. These obstacles take much time and resources from enterprises, which could be used for developing core business.
Mr Do Thu Thuy, Vice Chair of EuroCham Transport & Logistics Sector Committee, said that notwithstanding the enactment of Announcement 451/TB-VPCP on continued review of specialised regulatory documents on exports and imports (particularly 73 groups on the list promulgated together with Decision 2026/QD-TTg) to be amended and simplified to facilitate import and export of goods, there are still a lot of existing obstacles which are only slowly being fixed. The process of testing used equipment remains complicated and brings about additional shipping costs for importers.
She said the Government, ministries and agencies concerned must hold meetings with domestic and foreign business associations to update new developments to have best adjustments for new contexts.
Mr Thomas McClelland, Chairman of EuroCham Tax and Transfer Pricing Committee, said, Vietnam signed 75 tax agreements with other countries, but foreign companies and individuals can hardly utilise the benefits of tax treaties in Vietnam. Legally, agreement-enabled tax exemption and reduction documents need to be notified to local tax authorities. But, tax authorities do not require any formal reply or confirmation to be granted. With such inadequacies, foreign investors will consider choosing Vietnam as their locations of business because they have no benefits from such agreements.
According to EuroCham, although there are still shortcomings in shaping the investment environment, the Government of Vietnam has made efforts and grasped necessary conditions to maintain strong foreign investment flows. By providing favourable conditions for foreign investors to expand their market approaches, FDI inflows into Vietnam are expected to increase sharply. For the majority of foreign investors, economic performance is also an important factor of consideration.