It’s Necessary to Create Investor Confidence

In fact, the past time has demonstrated that the Vietnamese economy is still appreciated for its effective use of ODA by international donors. In particular, in the context of Vietnam performing economic restructuring, the Government’s constant care for improved public investment, the biggest user of ODA, is remarkable. In addition, Japan also highly valued Vietnam’s timely completion of projects. And, JICA-involved projects are also supported a lot from many directions of this work.

 

However, Japanese investors see that project completion in Vietnam only meets the target of completing infrastructure construction. Meanwhile, time and related cost issues are not mentioned much. Even if this criterion was taken into account in detail, it would be very hard for any projects to complete as planned. There are a lot of reasons, but the biggest are site clearance and the capability of project management agencies in tendering, coordination, and administration of stakeholders.

 

Positioned as a middle-income country, not only will ODA no longer be the driving force but many investors as European countries will also cut their funding to finance weaker economies. Or ODA support will be changed to new forms. However, in reality, despite being a middle-income country, Vietnam’s demand for infrastructure development investment remains very high. Thus, in the future, Vietnam should focus on new forms of investment cooperation such as PPP (public private partnership). And, JICA, a representative of Japan, also wishes to promote this mode of cooperation between the two countries of Vietnam and Japan. For its part, the Government of Japan still wants to further support Vietnam to become a country with a developed economy. In addition, we expect that Vietnam can compete with other countries in the region, because when Vietnam has a similar development level with Southeast Asian countries, it is a good investment condition for Japan.

 

Vietnam and Japan have elevated their relationship to a strategic partnership; thus, the financial support policy of the Japanese government will not have major changes. Specifically, Japan will continue to be the largest ODA donor for Vietnam with a committed value of US$2.6 billion for fiscal year 2012 (ending in March 2013). However, this figure is not fixed, as it largely depends on the progress of projects received from the Government of Vietnam.

 

With this financing commitment, Japan also expects a comprehensive and thorough reform of banking system and State enterprises. JICA also notes that foreign investors are interested in that issue; therefore, Vietnam should quickly publish accurate data on business results of State-owned enterprises. This will greatly help donors understand the health of the banking system and State-owned enterprises. After that, they will have more efficient capital injection strategies.

 

In addition, according to JICA, the fields where Japan wants to focus cooperation with Vietnam are infrastructure, human resource development and manufacturing industry. Japan also sees that when Vietnam sets the target to become a basically industrialised country by 2020, the Vietnamese Government should now focus immediately on developing supporting industries, high-level human resources and a skilled labour force. In addition, Japan will continue to support Vietnam to promote the development of small and medium enterprises. If these requirements are done well, ODA attraction will be better.

 

Currently, apart from Vietnam, some other Southeast Asian countries like Myanmar have also emerged as a favourite address for foreign investment sources like ODA and FDI, thanks to their preferential investment policies. Therefore, to get things done, Vietnam should identify strategically potential industries to enhance competitiveness in this global playing field. Another measure is improving the investment environment where initiatives of State management agencies play a very important role in grasping difficulties of investors, in order to make timely changes to issued laws and policies. Japan is currently working on agendas with the Ministry of Planning and Investment of Vietnam to come up with a roadmap as soon as possible for reforms on investment climate. Finally, Vietnam must create investor confidence; in other words, let them know how their investment capital is effectively contributing to their own country’s economic construction and development.