Vietnam steps up FDI mobilisation efforts

Vietnam is rolling out policies to improve FDI mobilisation

After the meeting with the task force for foreign direct investment (FDI) attraction in late-May, last week, Deputy Prime Minister Pham Binh Minh, head of the task force, urged all ministries and agencies to provide more general advice and policies to lure in more investors and strengthen investment promotion activities.

Of these, the Ministry of Planning and Investment (MPI) is the focal agency in the building of Vietnam's FDI mobilisation strategy by 2030 to be submitted to the prime minister this month. The ministry will also be forwarded all reports and recommendations related to enterprises’ difficulties and challenges sent to relevant authorities.

Based on initial feedback, tax and related issues remain a headache for investors. The deputy PM asked the Ministry of Finance to provide measures as soon as possible to remove challenges related to withholding tax (especially foreign contractor withholding tax), the conflicts of legal provisions on taxes as well as export, and import tariffs.

Meanwhile, DPM Minh asked the Ministry of Industry and Trade and relevant ministries to consider off-shore wind power projects and consider adding a new form of energy (hydrogen) to the master plan.

The Ministry of Labours, Invalids, and Social Affairs will have to make more efforts to urgently resolve all issues related to granting and extending work permits for experts working for foreign-invested enterprises; as well as accelerate the training of workers to meet the needs of large corporations for skilled, technical, and management workers in line with Industry 4.0 trends.

The efforts of the task force and the local governments have proven effective so far. A few weeks ago, Binh Duong People’s Committee handed over investment certificates to five foreign-invested companies valued at $1 billion in the midst of the fourth COVID-19 outbreak in Vietnam.

Of these, Polytex Far Eastern Vietnam (from Taiwan) had the largest capitalisation with a total investment of $600 million, followed by Cheng Loong (also from Taiwan) pouring an additional $100 million into its $1 billion local project, and Singapore’s New Motion Industrial Co., Ltd. registered a new $184 million project. This has pulled Binh Duong to the fourth position among 56 cities and provinces receiving FDI in the first five months of 2021, with the total investment of $1.1 billion.

Meanwhile, the task force has also boosted cooperation with numerous new billion-dollar projects in the first months, clinching deals like the LNG power plant in Long An and O Mon II thermal power plant in Can Tho, while encouraging others to expand.

Regent Garment Factory Ltd., a subsidiary of Crystal International Group Ltd., was approved in May to build another factory in Hai Duong with the value of $35 million. This is the fourth factory of the company which has so far registered the total investment of around $227 million in the country.

The total investment in the first five months saw a slight increase on-year to nearly $14 billion. Moreover, the average scale of newly- and additionally-registered projects has risen significantly since last year, from $2.2 million to $14.4 million, and from $7.9 million to $11.3 million per project this year.