Fiscal climate too gloomy for FDI

Fiscal climate too gloomy for FDI

It is vital that Viet Nam improves its investment climate to increase the flows of top-quality foreign direct investment (FDI) to the country, when most other Asian markets have also emerged as attractive destinations for FDI.

Although the Government announced plans to enhance the quality of FDI inflows into the country, while having concerns over impacts on the environment, there is a lack of incentive policies to encourage businesses to invest in environmental protection.

Japanese firm Ajinomoto Viet Nam invested US$10 million in a waste treatment plant to safeguard the environment, however, the company was not offered any incentives whatsoever to build the plant.

Hirokaru Motohashi, vice president of the Association of Japanese Enterprises in HCM City, was quoted by Viet Nam Television News as saying that enterprises still found it difficult to invest in Viet Nam, as policies on environment taxes, export-import taxes, labour restraints, wages and customs procedures are extremely complicated.

This has made many Japanese enterprises reconsider previous plans to expand their operations in Viet Nam and has led some of them to shift their investment to other countries, he added.

Minister for Planning and Investment Bui Quang Vinh said in last week programme that Viet Nam was losing its advantages when trying to attract more FDI, such as cheap labour and natural resources, toThailand and Indonesia

Few improvements have been seen in developing the infrastructure or simplifying administrative procedures, making investing in Viet Nam less appealing, he added.

Director of the ministry's Foreign Investment Agency Do Nhat Hoang said that Viet Nam must concentrate on attracting more FDI in the processing and manufacturing industries, instead of the real estate market.

Statistics show that FDI flows into the country has slowed down over the last three years. In 2010, Viet Nam targeted attracting around US$23 billion in FDI, however, at the end of the year only $18.1 billion had been recorded.

In 2011, the country attracted $14.7 billion despite its target of $21 billion. In 2012, FDI into the country reached only $13 billion, when the final goal was $15-17 billion.

However, in the first six months of this year, FDI injected into the country surged 15.9 per cent year-on-year, reaching $10.473 billion. Current levels of disbursement are estimated at $5,7 billion, up by nearly 6 per cent.

The country expects to attract a total of $13-14 billion of FDI this year, equal to last year's figure.

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