Vietnam should further promote the transparency if it wants to attract more FDI inflow from the world’s leading investors, especially those from the US and EU, into high-tech and modern services sectors, experts suggested.

Though Vietnam has gained a large amount of FDI over the past three decades, the inflow from the US and EU, which are the world's largest FDI markets with many potential investors possessing modern technology and services, has remained modest. 

Statistics from the Foreign Investment Agency under the Ministry of Planning and Investment (MPI) show that as of the end of August, FDI from Asia accounted for over 70 percent of total FDI registered in Vietnam.

Meanwhile, investment from the EU and the US is unnoticeable compared to the total FDI in Vietnam, as well as the investment capital abroad of these investors in the world and ASEAN countries.

The US has invested only nearly US$12 billion in Vietnam, accounting for some 3 percent of the Southeast Asian country’s total FDI. The number in deed was unnoticeable as the US last year invested US$342 billion abroad, up 22 percent over the previous year.

The same trend was also seen with investors from the EU. Though being considered one of attractive destinations for European investors, Vietnam attracted only US$24 billion from the investors, who poured US$334 billion abroad last year.

Meanwhile, Vietnam saw whopping US$60 billion from South Korean investors and US$50 billion from Japanese investors.

Projects of American and European investors are also small with the registered capital of each project less than US$10 billion. For European investors, their largest project in Vietnam worth US$8.3 billion belongs to the Netherlands and the second one worth nearly US$2.8 billion comes from France.

MPI said that economic and trade ties between Vietnam and the US and EU are developing relatively favorable, but FDI is still too modest, especially in high technology and modern services sectors.

More effective policies

According to experts, the world's leading multinational corporations, especially those from the US and the EU, often require a transparent and consistent investment and legal environment as well as convenient administrative procedures.

Nguyen Van Toan, Vice Chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE), said that what American and European investors want is a business environment which ensures transparency and healthy competition.

Sharing the same view, Nguyen Quang Bao, Deputy General Director of Viet Capital Securities JSC, said that the demands for high transparency and cultural differences make American and European investors hesitate to invest in Vietnam. The investors only act in accordance with the rules and want everything to be predictable and transparent.

VAFIE Chairman Nguyen Mai said that the shortcomings thus should be clarified to find out the best measures to attract American and European investors next time, especially when Vietnam prepares to summarize 30 years of attracting FDI.

When developing a report on strategic orientation for FDI attraction in the 2018-2030 period for Vietnam, experts of International Finance Corporation also emphasized the need to attract investments from American and European partners.

MPI has so far affirmed as the US and EU are still the markets with the most potential investors, suitable investment promotion activities should be taken for each type of firm and each country to meet the investors’ high requirements.

The prospect of attracting more FDI from the US and the EU therefore depends on Vietnam’s efforts to meet the investors' requirements for an open, transparent and predictable legal system besides effective regulations on intellectual property, anti-corruption and law enforcement, MPI emphasized.

Hanoitimes