Vietnam Needs More Favourable Business Environment

As “Brexit” has a strong impact on the world economy, Ministry of Planning and Investment has conducted preliminary analysis and forecasts regarding the immediate bearing on Vietnamese economy. MPI Minister Nguyen Chi Dung believed that so far Brexit has no major impact on Vietnam, as the UK is not yet a main partner with Vietnam in trade and investment. However, he warned that the issue must be carefully studied as the UK is a centre of global finance and banking which might have bearing on monetary policy of countries which are partners of Vietnam, in turn endangering the Vietnamese market.

 

For its part, General Statistics Office is reviewing all investment projects with the UK, especially on import-export to evaluate the impact. Meanwhile, MPI Foreign Investment Agency indicated that by June 26, remaining effective UK investment projects are 266 with total investment capital of US$5,584 million ranking 15^th among 116 partners in Vietnam. UK investors focus on real estate, with 8 projects and registered capital of US$2.06 billion, followed by processing and manufacturing with 79 projects and US$1.37 billion, and mining with US$1.3 billion.

 

Meanwhile Bao Viet Securities JSC (BVSC) believed that FDI by UK in Vietnam is not big and Brexit impact to Vietnam is not critical.

 

Regarding some concern that Vietnam will be most affected among ASEAN members, Prof Dr, Nguyen Mai, Chairman of Vietnam Association of Foreign Invested Enterprises (VAFIE), believed that FDI by UK in Vietnam makes up only 1.5 per cent of total FDI and half of it concentrating in real estate, affecting insignificantly present and future investments. Furthermore, in the first half of 2016, Vietnam-UK trade was worth only 1 per cent of the total value and UK leaving EVFTA will not affect seriously bilateral trade and economic relations. It may, however, be a psychological impairment as Vietnam stock market recently suffered due to the affect on local and foreign investors.

 

Regarding the importance of the legal system to business environment, business community and FDI enterprises, Minister Nguyen Chi Dung reaffirmed that laws and legal regulations must be most suitable to reality. Even Investment Law, if some clauses are not appropriate they must be amended so that Vietnam can have a most attractive business environment and receive investment inflow. The drafting plan is expected in October 2016 to submit to the National Assembly for approval.

 

The minister also informed that the government will not leave any legal vacuum at any time. The upgrading of communications into 49 Decrees are under way. It is not only in time (no later than July 1) but also best quality. Communications are not automatically upgraded into Decrees but undergone strict review to eliminate unnecessary ones.

 

Emphasising the importance of laws, decrees and communications, Deputy Director of Legal Department (MPI) Quach Ngoc Tuan said that the recent review clearly shows that the government is truly constructive for a healthy, accountable and feasible investment environment, caring for feedback from all sides. Regarding specific management, MPI is drafting amendments to Business and Investment Law and submit to the National Assembly in October. Though Investment Law and Enterprise Law have been updated, many provisions in specific laws remain unchanged and must be appropriate with the reform.

 

Sharing the same view, Dr Phan Duc Hieu, Deputy Director of Central Institute of Economic Management (CIEM), believed that though it needs more time to judge the effectiveness, the quality of change is evidently clear in the law making with more dialogue and transparency. While in the past, it was confined only among related authorities and submitted. And now, independent views are duly regarded. The government invites representatives of business community such as VCCI and independent parties to share their views at the meetings hosted by Government Office. As a result, the government obtains all elements for its decision. It ensures much efficiency for legal environment and business community can develop, Mr Hieu added.