Sunday, 19 Nov 2017

Business environment from different perspectives

Updated at Tuesday, 24 Oct 2017, 20:16
The Hanoitimes - Some experts said this is the right moment for foreign investment in Vietnam to be selective with conditions, while other said the business environment itself must be improved before taking different approach toward foreign investors.
At the conference with regard to the orientation for foreign investment attraction, which was held by the Vietnam’s Association of Foreign Invested Enterprises (VAFIE) recently, Vice Director of the KPMG Vietnam Nguyen Cong Ai said, before Vietnam to take a more selective approach toward foreign investment, the country must improve the business environment at first, especially on the law enforcement.

As such, with the current situation, it is difficult to maintain the Foreign Direct Investment (FDI) attraction, so that the problem is lying on the business environment itself. Evidently, the FDI inflow into Vietnam is mainly coming from Korea and Japan, which are countries have a long standing cooperation and good understandings of Vietnam. Among the total registered capital of 310 billion USD from 126 countries and regions, FDI from Korea and Japan contributed to more than 30%. 

Besides, the advantage of Vietnam’s golden population will not last long, so that the attraction of Vietnam may reduce after the next 7 – 8 years. Another factor influencing the business environment is the shortage of high qualified human resources. With this being said, KPMG when first came to Vietnam only have 100 staffs, so that until now the number of staffs have increased to over 1,200 staffs. During his time working in KPMG, he has experiences working with many trans-national companies (TNCs), which had had the intention to invest in Vietnam, but then these ideas had not materialized, due to the lack of high qualified human resources in Vietnam to meet the requirements of investors. 

Sharing the same viewpoint is the Vice Director of Ernst & Young Vietnam – Mrs. Huong Vu, despite the Vietnamese government has developed policies to remove difficulties for enterprises and investors, but the problems lie on the policies implementation. After 30 years of FDI attraction, Vietnam has become an attractive destination for investors and gaining valuable experiences in promoting and choosing investors. However, as situations in both Vietnam and in the world have turned unexpectedly, it is forecasted that the FDI inflow into Vietnam will be heavily impacted. According to the Development Strategy Institute of the Ministry of Planning & Investment, the growing trend of protectionism in some developed countries will no doubt affect Vietnam’s attraction of the FDI in the coming time. Besides, with the upcoming industrial revolution 4.0, in order to attract investors, Vietnam will have to transform infrastructure to meet new requirements, at the same time, it is necessary for policies to attract investors to be flexible and practical. 

When the advantages of Vietnam are gradually diminished and challenges are growing, the improvement of the business environment toward transparency, integrity and clarity to enhance competitiveness against other countries proves vital. Many experts agreed on the point that, no matter how efficient and attractive the policies, key issue will be the human factor. So that in order to have a long term strategy to attract investors coming to Vietnam, it is necessary to change the mindset and action of administrative agencies. 

Recent statistics showed that FDI inflow to Vietnam is in record high as in September, with 14.6 billion USD of newly registered capital. If this number includes projects with adjusted capital of 6.8 billion USD, the total registered capital will increase 21.7% compared with same period of last year. FDI fund disbursed in the first 9 months is 12.3 billion USD, up 15%.
Ngoc Thuy
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