Joining WTO: "We Are Going to Witness New, Unprecedented Wave of FDI"

The FDI flows into Vietnam will increase when Vietnam official joins the WTO. Vietnam has made quite good preparations for the penetration into a wide playing field. We appreciate Vietnam as a dynamic and potential market. The FDI investment into Vietnam will be poured into traditional sectors like garment, textile, leather and footwear and especially into the potential natural resource exploitation. However, the FDI inflows for service sectors such as tourism, banking and finance will be the most active. The Vietnamese Government must prepare more prudent regulations and management measures for these fields. Nonetheless, the most important thing is Vietnamese enterprises must know how to penetrate into the global system and first of all the active Asian chain.

 

Vietnam has considerably improved its environment to attract direct foreign investment in the last few years. This is decisively important as the country will soon surmount the threshold of US$1,000 annual per capita income and official development aid will lose ground as the motor of development it has been in the last few years. Vietnam will have to compete more with other countries for international capital on commercial basis.

 

To attract more foreign direct investment Vietnam will need to have clear and detailed legal provisions relating to foreign capital not only as statute law, but also on the administrative level. The perception foreign investors have of the Judiciary is also all important, as is that of the country's political and economic stability.

The investment climate in Vietnam has been continuously improving with the gradual and progressive enactment of the regulatory framework stemming from WTO membership. This is especially so since the Unified Enterprise Law and the Common Investment Law entered into force in July 2006.

The fact that Vietnam managed to attract nearly USD 6.5 billion in the first ten months of this year probably show that the choices made so far are the right ones. This stands as strong evidence for the continuous success of Vietnamese government’s policies to woo foreign investors. The WTO membership of Vietnam combined with an acceleration of the equitization process suggests that we are going to witness a new, unprecedented wave of FDI in 2007 for Vietnam. Vietnam will, however, need to resist temptations of short term gains in the equitization process, particularly in the telecommunications sector, where the experience so far is mixed.

 

Mr. Geicke is the co-founder of VinaCapital and has lived in Asia for 25 years with extensive operating and investing experience in the region.

 

With the recent economic indicators such as GDP growth, FDI inflows (7-8 per cent a year, U$S 6.4 billion for the first ten months of 2006) more and more foreign investors are eyeing Vietnamese market. It means that they are building hope about Vietnam while doing their business in the country and it is quite reasonable to believe that Vietnam is on the pace of sustainable development.