"Hotspots" for Investors in Vietnam

 

Mr Sin Foong Wong, International Financial Corporation’s Country Manager in Vietnam, remarked: after half a year being a full member of the WTO, Vietnam has proven to the world that it remains a quick-growing economy. Vietnam has been ready to set up a fair playground for all businesses of any economic sector. Several laws like the Enterprise Law and Investment Law help resolve difficulties for investors and basically satisfy the WTO commitment implementation.

 

An annual survey result released at the forum by Jana External Trade Organisation (Jetro) showed that the investment cost in Vietnam was lower than that in other countries. Especially, up to 60 per cent of Japanese companies doing business in Vietnam think the cost in the country is lower than that in China - the largest rival of Japanese production companies in ASEAN region.

 

Jetro said Vietnam had made progresses in lowering office leasing rates, container transportation, international telecom charge, and power bills. The result showed that 82.4 per cent of Japanese companies in Vietnam planned to expand investment in Vietnam while new Japanese investors also wanted to move their partial production asses from China or extend their production to a third country. Investors thought Vietnam was one of the two best destinations in Asia.

 

Co-chairman of Vietnam Business Forum, Mr Martin Rama, Acting Director of the World Bank in Vietnam, affirmed: Vietnam has made many successes in its economic development and has been recognised by the international community but when it integrated more deeply into the global economy, Vietnam had to solve more difficult issues.

 

Firstly, all investors are specially concerned about the human resource development. This is a “hotspot” affecting the FDI capital attraction in Vietnam.

 

Mr Alain Cany, Chairman of the European Chamber of Commerce (EuroCham) in Vietnam, analysed: The shortage of high-quality human resources and the fast inflation of salary rate forced many companies to seek and recruit their employees from other ASEAN nations. This is a potential risk for the instability of the business environment in Vietnam. Mr Alain said EuroCham pledged to be a “locomotive” to attract financial funds to further focus on human resource, education and training in Vietnam.

One of the current burning issues is investors worry about the difficulty in seeking qualified employees. Mr Andrew Curric, Chairman of Australian Chamber of Commerce and Industry (Auscham) in Vietnam, worried “The economic growth and new career opportunities on the labour market are positive for Vietnam but the businesses are encountering with challenges in recruiting qualified employees, especially Auscham members which focus on complicated manufacturing and high-grade services.”

 

Auscham proposed the Vietnamese Government to review the 3 per cent cap on the number of foreign employees a company can hire because it restricts the transfer of new technology and skill sets from abroad to Vietnamese workers. Regarding this issue, the Ministry of Labour, War Invalids and Social Affairs is revising the amendments to the t Decree 93/2005/ND-CP to resolve the concern of the 3 per cent foreign employee cap.

 

Ms Jocelyn Tran of American Chamber of Commerce (Amcham), also shared the above viewpoint and added that the human resource is the special factor directly affecting the FDI capital attraction in all aspects, either industry or high tech. To improve the efficiency of both quantity and quality of high quality labour force, the Vietnamese Government should “open up the door” for foreign-invested education units. On the other hand, it is necessary to build the relationship between the labourer, manager and government.

 

Secondly, Vietnam needs to quickly and strongly prevent corruption. Corruption remains an incurable disease of Vietnam, said Ms Jocelyn Tran. Especially, when the ODA capital sources for Vietnam are on the rise; such scandals like PMU18 in the infrastructure construction field make investors worry.

 

The bidding process and project implementation in Vietnam are still operated under the obsolete “give and take” mechanism, especially in the public service field, Mr Rama emphasised. The competition in bidding is not strong enough and many even think that the competition is unreal. This will trigger a gap between the donors and Vietnam.

“Prevention is better than cure.” Ms Jocelyn said the efforts in preventing corruption and the Vietnamese Prime Minister’s signing on “Anticorruption Action Plan for Asia-Pacific region” have, to a certain extent, “calmed down” investors.

 

 

The overloaded operation at seaports and the monopoly of the electrical sector are the “threats to FDI” of Vietnam. The participation of private sector in the power sector is necessary, Amcham recommended. On the other hand, the Government also needs to add more efforts to develop overland infrastructure system.