New FDI strategy puts hi-tech in focus

Vietnam’s new FDI attraction strategy and improved business climate is expected to boost high-quality FDI inflows

During a meeting last week to review performance in 2018 and set out goals for the year ahead, Minister of Planning and Investment Nguyen Chi Dung emphasised the importance of a new strategy on luring in foreign direct investment (FDI) to the country.

Minister Dung said that, along with the use of high-technology, attracting new FDI is crucial to national development, making it one of the key tasks set by the Ministry of Planning and Investment (MPI) in 2019. “Importantly, the Politburo will, for the first time, issue a specific resolution related to the strategic orientation of FDI attraction. The implementation of the resolution will help improve the efficiency in FDI attraction,” the minister said.

At last week’s Vietnam Economic Forum, the next-generation FDI attraction strategy was once again on the agenda. It was discussed together with the development of the digital economy and how to efficiently tap into a new generation of free trade agreements.

“With the influence of Industry 4.0, the world is now at a flash point of digital transformation. This is a chance for Vietnam to integrate technology in a way to increase labour productivity and optimise economic efficiency,” said Nguyen Manh Hung, Minister of Information and Communications.

Focus on high technology

At present, both domestic enterprises and international investors are waiting for the new FDI attraction strategy. The wait may soon be over as the strategy is being completed by the MPI, and will be submitted to the Politburo in April 2019, after a number of revisions, thus enabling foreign financiers to move forward.

In line with global trends and the development of new investment modes, the strategy will keep high-tech and new technologies one of its priorities. Further aims will include luring large-scale projects from transnational corporations named on the Forbes Global 2000 list in sectors using high-tech, new, and advanced technologies, and modern services.

As shown in the latest draft, the top priorities for FDI attraction in the coming years will include high-tech, new, and advanced technologies, IT and telecommunications, advanced electronics, automobiles, agriculture machinery, and supporting industries among others.

Looking forward, the EU-Vietnam Free Trade Agreement will come into effect this year, while the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) officially took effect in Vietnam on January 14, thus bringing in an array of new opportunities for the country.

Industry insiders believed that in order to become a more attractive destination, plans must be put into action soon.

Currently, business associations of CPTPP member countries see the enforcement of the agreement as a promising chance to increase market access. Many believed that the CPTPP will help Vietnam attract more FDI, particularly in the technology sector.

Improving ­business ­climate

According to Minister Dung, the MPI will focus on key tasks this year aimed at furthering the business environment, facilitating the private sector, and growing sustainably amid domestic and global challenges.

Notably, Resolution No.02/NQ-CP dated January 1 aims to implement key solutions to further improve the business climate and develop national competitiveness in 2019, with a vision towards 2021. The MPI will issue an action plan this month on how to carry it out. Also this month, the MPI is set to amend and ­supplement some regulations in Circular No. 20/2015/TT-BKHDT, governing business registration.

Legislation will continue until March when the MPI will submit to Prime Minister Nguyen Xuan Phuc a plan on the establishment of a national innovation centre and a scheme researching the possible impacts of the US-China trade war on FDI inflow into Vietnam.

In a move to grow human resources (HR) to meet the higher standards of foreign investors and the development of the economy in Industry 4.0, the MPI will also submit to the prime minister solutions on national HR development in June 2019.

A decree guiding the implementation of the international Treaty on Public Procurement will be put forward in this November.

The MPI is also preparing for some important draft laws, most crucially the amended Law on Public Investment, the draft Law on Amendments and Supplementation of a number of articles in the Law on Investment, the Law on Enterprises, and the draft Law on Public-Private Partnership (PPP).

These will be put forward along with legal documents relating to improvements of the business climate which will be given to the National Assembly this year.

Looking ahead to 2020, a new draft resolution on the tasks and solutions to further improve the business climate and to improve national competitiveness in 2020 will be put forward to the prime minister by the end of 2019.

Last year, the MPI took a number of measures to contribute to improve the business climate. The ministry acted as an advisor for the government to issue Resolution No.139/NQ-CP dated November 2018 on the government’s action plan to cut costs for businesses. Then Decree No.108/2018/ND-CP was issued, amending and supplementing some regulations of Decree No.78/2015/ND-CP towards simplifying administrative procedures on business registration. Also in 2018, Decree No.63/2018/ND-CP on PPP investment formats.

To create a legal framework for developing the models of eco-industry parks, supporting industry parks (IPs), and industrial-urban area-service parks, ­Decree No.82/2018/ND-CP governing the management of IPs and Economic Zones was issued to replace Decree No.29/2008/ND-CP and Decree No.164/2014/MD-CP. This enabled IPs to increase investment attraction.

In 2018, Vietnam attracted nearly $35.47 billion worth of total newly-registered FDI and stake acquisitions, slightly down by 1.2 per cent on-year, according to the MPI. Despite the slight fall, there has been an increase in science and technology FDI.

With these latest developments, the business community is ­expecting more favourable conditions when developing business activities in Vietnam, helping to ­increase perspective and therefore contributing to improving this year’s FDI ­outlook.