Workers produce electronic parts at the Nidec Sankyo factory in HCM City’s High Tech Industrial Zone (Photo: VNA) Hanoi (VNA) -Unresolved issues in Vietnam’s regulations and the business environment haveresulted in relatively low FDI inflows from US and European multinationalcompanies, experts say.
According to the Foreign Investment Agency (FIA) under the Ministry of Planningand Investment (MPI), as of July 2017, US companies had invested 9.3 billionUSD in Vietnam and the major EU nations of France and Germany registered 2.8billion USD and 1.6 billion USD, respectively.
The US stands at number nine on the list of countries and territories investingin Vietnam, way behind the number 1 investor, the Republic of Korea, at 55.3billion USD, or Japan at number 2 with 46.5 billion USD and Singapore at number3 with 41.6 billion USD.
The FIA said that regardless of projects, be it direct investments or mergersand acquisitions, the level of capital flow coming from Asian companies intoVietnam was much higher than the US or the European Union.
Nguyen Van Toan, Vice Chairman of the Vietnam’s Association of Foreign InvestedEnterprises (VAFIE), said he believed there was potential for higher FDI fromthese two regions, but this was yet to be tapped despite numerous bilateral andmultilateral free trade agreements.
He felt a lack of transparency in trade relations and administrative regulations,and Vietnam’s limited capacity to accommodate investment flows, arising fromlimited technological advances and a workforce that is still developing.
He also said Vietnamese authorities were yet to pay due attention to protectingintellectual property rights, a factor that makes US and EU investors hesitant.
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Agreeing with Toan, Jonathan Moreno, Chairman of the Manufacturing Committeeunder the American Chamber of Commerce in Vietnam, said that until Vietnam clearsup its business environment, especially in newer sectors like clean energy,there would be little change to capital inflows from the US into the country.
According to the European Chamber of Commerce in Vietnam, in the first quarterof 2017, the country’s Business Confidence Index dropped seven points from thefourth quarter of 2016 to 78 points.
Speaking at the 2017 Vietnam M&A Forum earlier this month, Tran Thanh Tam,Director of KPMG’s Markets Group, said Asian investors were moreinterested in smaller Vietnamese projects as a direct effect of signed tradeagreements and higher degree of familiarity with Vietnamese regulations than USand EU investors.
VAFIE Chairman Nguyen Mai said that the government must act soon and issue moreopen and facilitating policies to attract investors from the US and theEuropean Union. If not, significant changes in the current situation are unlikely.-VNA
VNA
