As of the end of October, total newly-registered, additional, and paid-in capital for share purchases by foreign investors in Vietnam stood at $23.74 billion; up against the same period last year. What are your thoughts on these figures given the pandemic’s effect on the country?
Global foreign investment flows in 2021 recovered better than expected. These impressive increases are due to the fact that, in the past ten months, three major projects have been granted new investment certificates or added capital: the Long An LNG Power Project ($3.1 billion) in the Mekong Delta’s Long An province, LG Display Hai Phong in northern Hai Phong city, which increased its capital by $2.15 billion, and the O Mon II Thermal Power Plant ($1.31 billion) in the Mekong Delta’s Can Tho city, so both newly-registered and additional capital rose sharply year-on-year.
In addition, as of June, the EU had 2,221 valid projects in Vietnam, an increase of 142 over the same period of 2020, from 26 of the 27 members of the bloc, with capital totaling $22.216 billion, an increase of $449 million against the same period of 2020 and accounting for 5.58 per cent of investment into Vietnam and 6.57 per cent of projects.
Commitments on transparent governance under international agreements and commitments from the Vietnamese Government creating an open and favorable trade and investment environment have contributed to such increases.
Having been in Vietnam for many years, what do you think about the country’s business environment now that lockdowns have ended and a “new normal” appears in trade and investment post-pandemic?
A “new normal” is a necessity, and the government understands that the country cannot and should not wait to resume business only once there are no Covid-19 cases. Companies are operating on the basis of the Ministry of Health’s 5K rules, to ensure safe distancing and hygiene practices among workers and customers. The “new normal” can be seen most clearly through the tourism and hospitality industry, which has suffered more than others since the coronavirus appeared in early 2020. Vietnam has opened up its tourism sector to domestic and foreign travelers alike. One common travel safety rule will be that all tourists and tourism staff must have been fully vaccinated or can furnish a certificate showing they had contracted and recovered from Covid-19. Travel companies will only be allowed to organize tours to “green zones” – those deemed at low risk of spreading the virus. They should also have contingency plans in place in case a visitor contracts the virus.
In a recent interview with a local newspaper, you said “Vietnam will regain its position as one of the most ideal investment locations in Southeast Asia.” Why do you believe so?
First, the government has introduced policies combining fiscal policy, monetary policy, and other sectoral or social security support policies, which include a group of short-term solutions and mechanisms in a number of specific industries and fields and groups of fundamental and long-term solutions to remove difficulties facing economic growth, and supported people and businesses that suffered from the pandemic.
Second, disease control measures have been taken seriously. In a very short period of time, most of Vietnam’s population received two doses of vaccine and the country has begun to vaccinate people under 18 years of age.
Third, Vietnam has conducted intensive institutional reform to ensure its adherence to commitments made under international pacts like the EU – Vietnam Free Trade Agreement (EUVFTA).
What issues must be addressed if Vietnam is to reach its full potential in trade and investment post-pandemic?
Among other things, Vietnam must be more selective in approving foreign investment projects, with an increase in quality and a decline in quantity, in order to eliminate small-scale projects with little added value. Equally important, disease control measures must be clearly available to businesses, for them to prepare their business plans.
What do you foresee for FDI into Vietnam next year?
The government has been trying to perfect the legal framework to implement commitments made under international agreements and to reform and simplify investment and business conditions. A number of legal documents have been promulgated or amended to be consistent with existing commitments, like the Law on Intellectual Property and the Labor Code. The Ministry of Industry and Trade (MoIT) has also cut 205 business investment conditions applicable to foreign investors.
In the 2021-2025 period, the MoIT will continue to review and develop a roadmap of plans to cut business investment conditions, administrative procedures, and specialized inspections, which will help foreign investors reduce the time and cost spent on compliance. Vietnam has been making visible efforts to meet high international standards in all sectors. With a vaccine program being carried out nationwide and the country expecting to fully resume business operations by the beginning of 2022, we expect to see an increase in FDI into Vietnam in 2022.
Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, a Member of the Supervisory Board of the PetroVietnam Insurance JSC, and the only foreign lawyer to address members of the National Assembly in the Vietnamese language.