Vietnam should be ahead in improvement of investment environment, said Deputy Prime Minister Vu Khoan at Foreign Investment Forum - Forinvest 2005 in Hanoi. In a press interview, the Deputy Prime Minister disclosed that Vietnam will increase service revenue to 41 per cent of GDP and service export turnover to US$8 billion by 2010. The objectives partly depend on the development of foreign investment in Vietnam.
How do you evaluate foreign investment in recent years and its impact on Vietnamese import-export value?
20 years ago, one of the main purposes of the renewal process in Vietnam was to expand international co-operation, integrating with regional and world economy. In 1987, the National Assembly approved a foreign investment law with liberal provisions and so far the law has been amended four times and become more attractive. As neighbouring countries continue to improve their investment environments, Vietnam must also improve its investment law and formalities. Due to those efforts and comparative edge in human and natural resources and political stability, Vietnam has attracted important amounts of foreign investment. The registered foreign investment has totalled to nearly US$50 million from 70 countries and territories. FDI makes up 15 per cent of GDP, 37 per cent of industrial production value, and 54 per cent of the export value of Vietnam. Those figures speak out the importance of foreign investment in Vietnam.
How would FDI affect sensitive sectors that we are going to open such as banking and insurance?
It is imperative that we have to open them, but the process will depend on the pace of our negotiations. In fact, we have already opened them in insurance, where there are already 4-5 foreign companies operating, and a similar number in the field of banking. Through such experiments, FDI proved to be positive. First, it promotes competition demanding Vietnamese companies to make greater efforts. Second, it offers more and better facilities for Vietnamese consumers. Third, we can learn from the business activities in those new fields.
The biggest pressure facing FDI is the fierce competition. Without adequate preparation, Vietnamese businesses may collapse. So far, however, we notice no such danger, only that our economy has become more agile.
A new influx of investment is expected in 2006, what should Vietnam do to prepare, especially regarding infrastructure to attract more investors?
Infrastructure has two aspects: “hard” and “soft”. We are actively preparing for “soft” infrastructure with a legal framework. The National Assembly will discuss the common investment law that also includes foreign investment. It will help attract new investments to Vietnam. As for ”hard” infrastructure : electricity, roads, etc. The recent issue of Government bonds is mainly for the building of roads and other public works. We have opened the door for foreign investors to participate in the development of infrastructure under BOT form.
Like business, investment implies competition. As neighbouring countries are improving their investment environment, we have to improve our investment law and formalities. Second, we have to reduce service fees such as telecommunication, air transport and others for foreigners. Third, administrative reform must be accelerated such as the “one-stop shop” mechanism that is being applied by cities and provinces. Fourth, we have to increase our competitiveness. Joining WTO also means competing with other countries. Living in a changing world, miss a step and we will lag behind. Therefore, we must stay ahead in the improvement of investment environment.
Reported by Kim Phuong
Vietnamese
