Policies calling for foreign investment in Vietnam

Policies calling for foreign investment in Vietnam? Vietnam’s policies to attract foreign investment. In the coming period, Vietnam’s foreign investment strategy will continue to shift from attracting at all costs to selective attraction in order to improve the country’s production capacity and spread foreign direct investment ( FDI ) throughout the domestic economy;

Restrict foreign direct investment projects that have a negative impact on the environment or use outdated machinery and technical equipment, consuming resources and energy; Utilizing low-skilled, low-cost labor, little added value, and low technological content …

In addition, in the face of changes in the trend of FDI inflows, and countries in the region are accelerating to attract high investments. – With the inflow of quality foreign direct investment from multinational corporations and companies, Vietnam also needs to put in place appropriate policies to welcome this shift.

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1. What are the foreign investment policies?

Foreign investment policy is a policy in the economic development policy system. Events of national significance are planned. Including the country’s perspectives, principles, tools and methodological systems used to manage the country’s international investment activities. Carry out overseas investment activities to attract foreign investment. Aim for something.

Foreign investment policy is the policy of direct investment in a country’s business and production. Made by a company or individual in another country. Investments can take the form of acquiring or expanding a company’s operations in another country.

Invest abroad and attract foreign capital.

For every country, both investment activities have always received equal attention. There are also investments in other markets and optimal use of economic development investments. Attracting foreign capital is closely related to overseas investment.

Depends on the different stages of a country’s operations.

Developing countries have a high demand for foreign direct investment in their countries at an early stage. It was during this period that they realized that the application of technology or the level of labor was not yet sufficient to achieve full operational efficiency. Attracting foreign investment is conducive to learning from experience.

Promote rapid economic growth. When domestic enterprises accumulate enough capital, there will be demand for foreign investment. These investment activities all mean economic cooperation and development. On the other hand, we should give full play to our advantages, give full play to our benefits, and increase our income.

2. Vietnam’s policies to attract foreign investment

2.1. Create an attractive investment environment

The key issue for organizations to attract FDI is to create an attractive investment environment. The investment environment is the sum of its parts that interact and strongly influence investment activities. It forces investors to appropriately adjust their purpose, form and scope of activities to create favorable conditions for business activities and bring higher operating efficiency .

One can classify the investment environment according to many different criteria, each of which results in a different component environment :

– From the perspective of spatial scope: there are enterprise internal investment environment, domestic investment environment and international investment environment .

– Based on fields: political environment, legal environment, economic environment, social and cultural environment, infrastructure…

– Based on attractiveness: the investment environment is divided into highly competitive investment environment, medium competitive investment environment, low competitive investment environment and non-competitive investment environment .

2.2. Protect the basic rights of investors

Investors’ basic rights and protections include :

– Non-expropriation guarantee: This guarantee is usually provided in Article 1 of the Foreign Investment Law and by signing and participating in multilateral investment guarantee agreements .

– Loss Guarantee: This guarantee occurs in the following circumstances :

Nationalization: Investors will be interested in a country’s government’s response to nationalization. In Vietnam, the law stipulates that foreign-invested enterprises shall not be nationalized; some countries provide for nationalization under special circumstances and appropriate compensation .

+ Damage caused by war: Damage caused by foreign wars is usually not compensated, but damage caused by problems in the country such as insurgency, terrorism, etc. will be compensated .

+ Inconvertibility of currencies: For non-convertible currencies, foreign investors will be guided on how to balance the necessary foreign currencies and how to convert from domestic currency to foreign currency .

– Transferring (sending) foreign exchange: For foreign investors, the best possibility is to have no host country regulation. From there they are free to transfer funds back home. If desired, the following amounts must be repatriated to the home country in any case: profits, other income, return on investment, invested capital, principal and interest on foreign loans, wages of foreign employees, royalties, technology fees…

2.3. Protection strategies and priorities for investors and foreigners

Include the following questions :

– Recruiting foreigners: Recruiting foreigners is to ensure the interests of investors. Some regulations often used by various countries to regulate the recruitment of foreigners :

+ Provide that the total number of foreign workers must not exceed a certain level .

+ Issuance of residence permits or foreign worker cards for foreign workers and provisions for persons who are required to hold such cards in order to work in the host country .

+ Regulations regarding occupations required for hiring foreign workers. + Provisions on the design of training programs for replacing foreign workers with domestic workers .

– Intellectual property rights: The security of ownership of inventions and trademarks is also an incentive for investors .

-Government investors are given priority

Government loans or support are seen as one of the incentives to encourage investment .

– Ensure a level playing field .

Investors want to ensure a level playing field between domestic and foreign investors, foreign investors, the private sector and the public sector, including :

+ Import competition: The host country’s import policy needs to be appropriate and create conditions for the development of the country’s industrial policy. Domestically produced products are considered emerging industries and therefore have a period of protection in order to compete with imported products .

+ Government competition: Government programs supporting state-owned enterprises must not violate competition. This requires the state to clearly differentiate between regional preferences. Public areas shall not encroach on private areas .

+ Domestic competition through taxation that removes barriers to industry entry, which involves establishing equal competition between foreign and domestic investors .

2.4. Land incentives for foreign investors

This can also be considered one of the investment incentives as it gives foreign investors confidence in the stability of their investment, among other rights. Generally speaking, the most beneficial thing for investors is to own property. If the law does not allow owning real estate, the investor must use the property within a reasonable period of time .

Before June 30, 2014, land incentives were divided into two distribution methods: land use fees and land rents. The amounts payable were reduced by 20%, 30%, and 50% respectively, or exempted for 7 years, 11 years, and 15 years. From July 2014 to the present, the land incentive policy has been in accordance with the 201

The “Land Law” and the detailed regulations on the collection of land use fees, land rents and water surface rents are implemented. Accordingly, the state agrees to implement a fixed-term, divided-term leasing form of land for production and operation. At the same time, in order to attract investment and strengthen the management and effective utilization of land financial resources in economic zones and high-tech zones, the government issued Order No. CP on April 3, 2017, stipulating the collection of land use fees. Taxation, land rent, water surface rent, etc. in economic zones and high-tech parks are more preferential than conventional investment projects…

In addition, the government has also introduced a number of land policies and support for enterprises, such as :

(i) Land rent reduced by 50% during 2011-2014 ;

(ii) Adjust the calculation ratio of general land rent unit price from 1.5% (stipulated in Decree No. 121/2010/ND-CP) to 1% (stipulated in Decree No. 46/2014/ND-CP – CP) and the Provincial People The Commission should provide within the framework a rate of 0.5% to 3% for each area and route corresponding to each land use for the local collection of land rent ;

(3) When determining the land price, the land price adjustment coefficient should be used to calculate the land rent .

2.5 . Tax-free.

Tax incentives are part of the FDI policy and are always related to the direction and overall FDI policy. Therefore, fiscal incentive policies often focus on tax policies such as corporate income tax, import and export taxes, personal income tax, etc. Specifically :

Capital tax exemption: The government does not tax transfers or stock gains .

– Tax exemptions and reductions, corporate income tax (CIT )

After a company makes a profit, investors will temporarily enjoy the incentive of not paying taxes. After the tax holiday, various countries reduce taxes .

In order to serve the economic transformation strategy and direction, the tax policy system continues to be reformed. The most important change is the reduction of general tax rates. Specifically, through the revision of the Corporate Income Tax Law, the ordinary tax rate has tended to drop from 28% in the 2001-2008 period to 25% in the 2009-2013 period, 22% in the 2014-2015 period, and 20% in 2015. January 1, 2016…

Currently, for a group of new investment projects in special fields, the highest preferential tax rate is 10% for a period of 15 years, tax exemption for 4 years, and 50% tax reduction for the next 9 years. Information technology, software, renewable energy, environmental protection…

– Reduction of other income taxes .

The government allows investors to avoid paying local taxes such as sales tax and profits tax. The exempted industries can be export-oriented industries or industries that earn large amounts of foreign exchange for the country .

——Tax reduction and exemption for imported production means (capital) .

The government does not impose taxes on the import of capital goods (including machinery and spare parts, spare parts, and raw materials) that serve export-oriented industries, industries that implement strategic policies and other encouraged industries. National industrial strategy encourages project investment .

In order to meet the requirements of the integration commitment, improve export preferential policies, and attract foreign direct investment, the “Import and Export Tax Law” was continuously updated and revised in 2001, 2005, and 2016. From 2016 to present, the 2016 Import and Export Tax Law applies preferential policies. Accordingly, the law increases the exemption of high-tech enterprises, technology enterprises, scientific organizations – technologies that cannot be imported from import taxes on raw materials, supplies and parts. Produce domestically within 5 years from the date of production; Supplement the tax exemption provisions for raw materials, supplies and parts that cannot be produced domestically for the production and assembly of medical devices that need priority for research and manufacturing .

A number of export and import tax incentives are being implemented, such as:

(1) exemption from import taxes on goods imported for foreign processing, and exemption from export taxes when exporting and returning products to foreign countries.

(2) For duty-free imported processed goods, temporarily imported re-export goods, and goods used as raw materials and materials for the production of export goods, the tax payment period can be extended to 275 days from the date of tax payment. Taxation. Issuance of customs declaration form; For temporarily imported and re-exported goods, the tax payment period can be extended to 15 days from the date of validity;

(3) Creation of fixed assets for investment projects in specially encouraged investment fields, investment promotion fields and difficult local socio-economic conditions Goods are exempt from import duties…

– Royalty Free. Royalty exemptions are intended to encourage foreign investors to transfer technology to host countries. However, the government will also consider whether to waive royalties for the life of the contract or only for a few years .

– Exemption from other taxes and fees: Other exemptions from taxes and fees include various forms of personal income tax for foreign technical experts working in priority areas; sales tax or special tax when starting a business… Signing a double taxation agreement is beneficial to investors It is said to be an incentive because it exempts individuals from paying income tax for a certain period of time .

In some projects that encourage investment, investors can also receive discounts on land rental prices and other costs during project implementation and operation .

2.6 . Government subsidies

– Organizational and operational costs. The host government may allow it to be included in project costs for a certain period of time .

– Reinvest: If you reinvest your profits, you will enjoy certain rewards .

Investment subsidy: Allows a certain amount of investment funds to be exempted from investment obligations for a certain period of time .

– Other deductions: These deductions may exist in special regulations for certain industries, such as allowing for double exemptions in terms of value and timing of promulgation of regulations, as well as specific incentives for specific projects .

– Investment tax credit: This is essentially a measure used by the government to encourage and help investors increase their investment capital, such as investment subsidies, tax refund obligations that have been paid to investors. If investors must reinvest

Other tax credits :

To incentivize investors, foreign income that has been taxed abroad can apply for domestic tax exemptions and be used as investment credit .

2.7. Special Offers

For multinational companies :

These companies are the main source of global investment capital, so special incentives for multinational companies are necessary, but the government must consider whether incentives should be implemented, especially how to ensure the principle of “level playing field”

Some cases use special incentives :

+ Treat multinational companies as listed companies on the stock market and enjoy similar incentives

Allow multinational companies to establish joint stock companies

+ Encourage multinational companies to transfer technology and conduct internal procurement, encourage the establishment of headquarters, allow multinational companies to set up shopping malls in host countries, simplify customs procedures, foreign exchange management requirements, employee card registration, etc. The establishment of export processing zones, high-tech zones, and technology concentration zones is also a measure to encourage multinational companies to operate in the host country.

-For offshore financial institutions, encouraging the establishment of these companies also means encouraging foreign enterprises to invest in the host country. Therefore, the host country government often exempts the local government from tax and financial obligations and facilitates the establishment and operation of these companies offshore. financial institutions .

2.8. Laws that create favorable conditions for foreign investors

These are separate regulations that facilitate foreign investors doing business in the host country. This category includes non-financial incentives such as allowing unrestricted recruitment of foreign workers, ensuring the transfer and repatriation of capital and profits; signing agreements; authorizing the sale of consumer goods to final consumers other than through agents or trading companies or Own land .

3. Purpose of investment promotion policy

3.1 Supplement funds for social and economic development.

Up to now, Vietnam has accepted investment from 140 countries and regions around the world, accounting for approximately 25% of the total social investment capital and 55% of the total industrial output value; exports account for more than 70%. Foreign capital has flowed into most parts of the country, and many projects are invested by internationally renowned companies such as Intel, Microsoft, Foxconn, Samsung, Sanyo, Sony, Fujitsu, Toshiba, and Panasonic, forming the “Belt and Road” pattern. Petroleum, electronics, telecommunications and other key economic industries…

As of January 20, 2022, after 35 years of “welcoming” foreign direct investment, 63 provinces and cities across the country have attracted a total of 34,642 effective projects, with a total registered capital of nearly US$415.6 billion. The cumulative realized capital of foreign-invested projects is expected to exceed US$253.2 billion, equivalent to nearly 61% of the total effective registered capital.

Economic data for 11 months in 2022 released by the General Bureau of Statistics show that as of November 20, 2022, Vietnam’s total FDI reached US$25.14 billion, a year-on-year decrease of 5%. Compared with the 5.4% decline in the same period in October 2022, the amount of foreign direct investment capital has improved as foreign investors advance project registration procedures .

3.2 Help create employment opportunities for workers and promote technology transfer and development.

In 2021, foreign direct investment enterprises created employment opportunities for 4.6 million workers, accounting for more than 7% of Vietnam’s total labor force (1). In addition to directly creating employment opportunities, the FDI sector also indirectly creates employment opportunities for many workers in supporting industries or other enterprises in the commodity supply chain of FDI enterprises. The average salary of workers in FDI enterprises is 11.2 million VND/month, which is about 1.2 times higher than the state-owned sector or non-state-owned sector, and also higher than the economic average (2) .

The foreign direct investment department also makes important contributions to improving the quality of Vietnam’s human resources through the company’s internal training system or jointly with the company’s external training institutions.

Survey data from the Ministry of Labor, Invalids and Social Affairs in 2017 show that more than 57% of foreign direct investment enterprises have implemented employee training plans. Among them, self-training accounts for 40% and joint training institutions account for 17%(3).

This helps to improve the human resource quality and labor productivity of FDI enterprises, and has a positive effect, promoting the improvement of Vietnam’s overall human resource quality through the flow of labor from the FDI sector in the region to other regions .

With the investment activities of FDI enterprises, many machinery, equipment and technologies are imported for production; transfer of technical processes, technical knowledge and theory, and management experience to Vietnamese engineers, technicians and managers; many Vietnamese skilled workers, technicians and managers Personnel can fill the role of foreign worker very well.

The above results are not only beneficial to enterprises, because Vietnam’s labor costs are much lower than foreign labor costs for equivalent jobs, but also very beneficial to Vietnam’s technological development and human resources, improving competitiveness to attract foreign investment.

In fact, many large economic groups with high-tech products from Japan, South Korea, the United States, etc. are investing in Vietnam, especially Samsung Group, which aims to build the world’s largest factory in Vietnam. A large R&D center with 2,000 recruiting engineers in Vietnam creates very favorable conditions for technology acquisition and development .

3.3 Promote deep integration.

Integration and foreign investment are two aspects of each other. The results of integration effectively promote foreign investment and vice versa. In recent years, it has actively negotiated and signed free trade agreements, especially new-generation free trade agreements, to help Vietnam improve its economic and trade relations with various countries.

Foreign investors have begun to pay more attention to the Vietnamese market, thus opening up prospects for investment and business cooperation between Vietnam and foreign partners.

Although the commitments in the free trade agreement are mainly related to the opening of the goods market and tariff reduction, there are still provisions directly related to the opening of the service market, investment and political books. In the areas of investment where there are commitments, Vietnam and its FTA partners have confirmed the application of important principles, such as non-discrimination against domestic and foreign investors and non-implementation of certain measures.

In addition, Vietnam is constantly expanding the areas in which FTA partners allow investors to invest and do business in Vietnam, which is and will create attractions that will lead to attracting FTA partner countries to invest in Vietnam in the future. With these commitments, opportunities to expand the export market for Vietnamese-origin goods are increasing, so foreign direct investment companies will flock to Vietnam now and in the future to take advantage of this opportunity.

The most important thing that allows FTA to help Vietnam have more opportunities to attract FDI is the impact of FTA on Vietnam’s economic system and business environment.

It is precisely the implementation of the FTA commitments that requires the Vietnamese government to further strengthen the review and improvement of the legal system, formulate new policies and mechanisms, and create a good business and investment environment for domestic and foreign enterprises, thereby enhancing and promoting the development of Vietnam’s economy. Attract foreign direct investment into Vietnam.

3.4 Establish contact with domestic enterprises.

As Vietnam’s private sector becomes more and more actively involved in the supply chain, the FDI sector has had a spillover effect on technology and management, bringing certain benefits to domestic private sector enterprises.

Since 2016, FDI companies have become less and less dependent on raw material suppliers in the country of origin. The proportion of FDI companies purchasing raw materials from companies in the country of origin has gradually dropped from 58.7% in 2016 to 41.4% in 2020.

At the same time, FDI companies have also become less dependent on suppliers. Compared with five years ago, supplies from third countries . It was reported that only 26.8% of foreign direct investment enterprises used third-party suppliers in 2020, compared with 39% in 2016(4) .

Many Vietnamese businesses directly benefit from joint ventures, cooperation with foreign direct investment enterprises and participation in the production chain of export goods.

For example, the number of Samsung’s first-tier suppliers increased from 35 companies in 2018 to 50 companies in 2020; the number of second-tier suppliers also increased from 157 to 170; 240 Vietnamese companies have joined Samsung’s supply network.

Toyota Vietnam has a total of 33 suppliers by 2020, including 5 Vietnamese suppliers (accounting for 15.15%) (5) .

In addition to achieving some results, the implementation of Politburo Resolution No. 50-NQ/TW still has some limitations :

First, the country’s ability to manage FDI is still low .

In the current management, there is still a lack of close linkage between local national management agencies, between the central and local governments, and between ministries and departments, and there is still incomplete and untimely information on foreign direct investment in various places .

Tax evasion and transfer pricing by some FDI companies cannot be completely eliminated, which also exposes the weaknesses in FDI project management. The proportion of FDI companies with long-term losses reaches 50% to 65% (6), and the conversion of most joint ventures to 100% foreign investment is an unusual phenomenon, indicating the existence of major abuse of preferential policies and “diversion” phenomena. “pricing” mechanism, causing damage to the national budget.

The environmentally polluting projects reported by the media in the past period have sounded a very valuable warning to us. Abandoned technology projects and backward technologies are still trying to penetrate into Vietnam, leaving unpredictable consequences and serious Impact on sustainable development goals .

Second, the spillover effects and added value of FDI are not high yet .

Despite record FDI attraction, “spillover effects and added value” are still very limited, mainly concentrated in labor-intensive projects with relatively low added value, resulting in capital inflows. FDI is high, but domestic value added is relatively low; low-wage jobs; poor spillover effects; priority abuse; skills gap is widening, risk of falling into the “middle-income trap”. For a long time, we have often preached the “advantages of cheap labor”.

It would be extremely harmful to focus too much on “playing out” the short-term static advantages of labor. The competitiveness of Vietnamese enterprises is slowly improving. It can be seen that most FDI projects in Vietnam are of low quality, and the “life cycle” of FDI projects is as long as 20 to 30 years, or even 40 years. In other words, Vietnam must endure a “low-end” economic structure that will last 20 to 30 years or more. If most of these projects are still operating at a loss, the direct losses will be even greater .

Vietnamese businesses’ supporting industries and participation in production value chains remain limited. After 35 years of attracting FDI, the connections between domestic and foreign investors are still weak, and the spillover effects of foreign partners on the technology and labor productivity of domestic enterprises are still not obvious. The weak link is first reflected in the fact that the proportion of FDI enterprises with 100% foreign investment is about 80%. In addition, the linkage between FDI companies and domestic companies is still progressing slowly (7) .

The weak linkage is also reflected in the low localization rate of domestic supporting industry products. Specifically, as far as auto parts supply companies are concerned, most supporting industry companies only supply domestic auto assembly products. According to statistics from the Ministry of Industry and Information Technology, the localization rate of private cars with less than 9 seats is low, with an average of about 7-10%; the goals set are 30-40% in 2020, 40-45% in 2025, and 50-55% in 2030 ( 8).

In other words, the current localization rate in the electronics industry is only 5-10%. Most of the electronic products on the Vietnamese market are imported complete machines or most of the imported parts are assembled domestically. At the same time, by the 2025 target, the localization rate of the electronics industry must reach 45%, which is a challenging goal (9).

The main reason for the above situation is that the capabilities of domestic enterprises in this industry are still limited, and product quality has not yet met the high requirements of the market and foreign direct investment enterprises .

Third, granting too many “preferences” to foreign investors will reduce tax revenue .

When attracting investment, various places accept “bottom-up” competition. Places with more incentives and “open” constraints are more likely to be chosen by investors. In order to win the competition, local governments are willing to pay high “prices” in exchange for benefits. Local governments will increase their GDP, create more jobs, and increase their budgets, but they will suffer long-term losses.

Recently, many places are still considering quantity, so they have introduced many preferential measures to attract investors. Tax rate differences, tax rate concessions, tax exemptions and tax reduction regulations between countries and between different objects in a country…have created tax avoidance incentives not only for corporate FDI companies, but also for domestic companies, and created the “transfer pricing behavior of companies” loopholes”. The main reason for this situation is the limitations of our mechanisms and policies .

4. Some solutions

4.1 We must innovate investment methods.

In order to become more attractive to foreign direct investment, Vietnam needs to change the way it thinks about attracting foreign investment. Therefore, it is necessary to fundamentally change the orientation of utilizing foreign capital, especially to promote investment with appropriate and pragmatic goals, rather than engaging in mass investment. The “New Generation Strategy for Attracting Foreign Direct Investment” is a shift from attracting the right investors for “products” to developing the right products (i.e. the right business environment and investment conditions) for the types of investments Vietnam will need in the future. 

In recent years, many places have said no to small projects with backward technologies. Foreign businessmen no longer take projects to many provinces and cities to “haggle” and compare preferential measures. There are many projects, such as textiles, footwear, that investors would have quickly been ready to enter if there was a local “nod”, but were not selected because they did not meet the requirements of the new “filter”.

The directions for attracting the new generation of FDI are high-tech projects, source technology, automobile industry, motorcycle and supporting industries, machinery, industrial equipment, logistics, new high value agricultural products, environmental technology, renewable energy, information technology application services, financial services and education. .

There are still differences in the development levels of various regions in the country, and it is necessary to attract FDI in a balanced and reasonable manner between regions according to Vietnam’s socio-economic development plan for the future period.

Therefore, we need to use FDI capital to formulate socio-economic development plans. Places with relatively developed infrastructure and human resources should focus on introducing high-tech projects, new technologies, R&D projects and modern service industries. Places with difficult conditions will continue to attract foreign direct investment projects in labor-intensive industries, but conditions such as technology, environment, and energy conservation must be guaranteed.

The national list of projects to attract foreign direct investment will clearly list each type of large-scale projects by industry in each specific area, making it clear and transparent for foreign investors while avoiding competition. Running projects between localities and investors… deteriorates and reduces the competitiveness of Vietnam’s investment environment.

In terms of partners, priority should be given to attracting multinational companies to set up headquarters, R&D centers and innovation centers in Vietnam, and to encourage Vietnamese companies to transfer technology, skills and management. Maintain attraction to traditional markets and partners, and expand cooperation with other potential markets and partners .

4.2 Avoid giving too many unreasonable incentives to foreign investors.

Shifts in trade, investment flows and global supply chains in the wake of the COVID-19 pandemic have posed many challenges to Vietnam’s tax system, especially as Vietnam tends to use incentives. Taxation is used as a tool to encourage domestic investment and attract foreign direct investment to create competition rather than working with the state to promote economic growth .

Currently, many multinational companies can enjoy a 10% tax rate when investing in Vietnam, which is half lower than the ordinary 20% tax rate. Attracting FDI is necessary and can promote economic development, but excessive incentives or attracting FDI at all costs will bring burdens to the economy and will also bring a certain degree of inequality in the economic environment to domestic enterprises.

FDI companies from big countries have rich experience in conducting business activities; if we give tax incentives without a strong enough system, we will not be able to combat tax evasion and tax avoidance.

The “Vietnam Economic Annual Report 2020” by the Institute of Economics and Policy Research (VEPR) with the theme of “Strengthening the Fiscal Pivot of Development” shows that the annual tax loss from FDI in the region is expected to be from VND8 trillion to VND9 trillion. , equivalent to 4-4.5% of corporate income tax revenue. The amount from the non-state-owned sector can reach 10.5 trillion yuan, equivalent to 5% of corporate income tax revenue.

Therefore, the government needs to have certain choices in the application of preferential policies and cannot blindly indulge. It should give priority to implementing tax incentives for FDI companies. Generous and redundant incentives should be eliminated to create a fair business environment and create conditions for many individuals and organizations to participate in economic activities and contribute to the economic innovation process.

4.3 Prepare conditions to attract high-quality projects.

In the future, we must continue to improve the system and laws for attracting foreign investment, and improve the quality and efficiency of attracting and utilizing foreign investment; at the same time, it is necessary for all ministries, commissions, and local governments to actively, powerfully, simultaneously, and substantively participate to create a fair, open, and transparent investment operation business environment.

Therefore, the focus is on the supervision and evaluation of foreign direct investment projects, especially “underground” investment and “hidden” investment, that is, in the form of Vietnamese individuals opening real estate companies with a capital contribution ratio of less than 49%; loans to Vietnamese individuals to start businesses… …

The solution to this problem is to speed up the construction and improvement of the national foreign investment information system, establish a complete database, and carefully and accurately evaluate the efficiency of foreign direct investment in Vietnam. Vietnam .

It is necessary to avoid the phenomenon that relevant systems and laws are incomplete, overlapping, and not strictly enforced. Some foreign investors take advantage of legal loopholes to make profits, invest “underground”, and invest “hiding in the shadows.” and departments. Continue to improve the systems and laws related to foreign direct investment, including the application of the world’s lowest tax rate in Vietnam .

Improve the investment and business environment, sort out the investment policy system, and support investors in solving problems; strengthen national management of foreign direct investment from the project promotion, evaluation, and implementation stages to the implementation inspection and supervision stage.

The government should issue a decision as soon as possible on the criteria for assessing the effectiveness of the foreign direct investment sector.

The set of evaluation standards being formulated includes 26 specific economic, social, environmental, and technical indicators… which will serve as the basis for foreign investors to self-score and the basis for local governments to continue to accept investment project screenings .

Human resources with professional qualifications and high technical skills must be developed. If the labor force only knows assembly and outsourcing, it will be difficult to invite good investors, investors in digital economy software or manufacturing cutting-edge products, or investors in the chain.

Human resources training and development are also areas that need to be focused on in the future. Improving the quality of education and training, especially cultivating a workforce of skilled workers, must form the basis for a new wave of investment.

At present, investors are faced with the dilemma of being unable to hire domestic technical personnel who meet the requirements and can only rely on imported experts and technical personnel from abroad. However, the regulations and procedures in this field are still cumbersome and complex.

We restrict the import of unskilled labor, but it is difficult to recruit high-tech workers from abroad when necessary, which will hinder FDI companies’ recent plans to expand investment in Vietnam. Places that want to attract good FDI companies must assess their ability to attract human resources. When the time comes, we hope it is “right” to call for FDI projects .

4.4 Synchronous connection infrastructure.

If the quality of roads is poor, the infrastructure in industrial parks and urban areas is not good, and the legal system and cultural conditions of investors are not suitable, it will be difficult to recruit good foreign direct investment projects. Many industrial areas have been formed. We usually only see land, roads, factories, factories… but not the services, living space and ecosystem of production and operation. An industrial park is not just a factory, but a comprehensive ecosystem with good production and operation conditions, especially an ecosystem that can promote innovation…

5. Utilize foreign investment projects

157 foreign investment projects will be attracted during 2021-2025

Executive Deputy Prime Minister Pham Binh Minh signed Decision No. 1831/QD-TTg, announcing the list of national projects to attract foreign investment from 2021 to 2025 .

Therefore, between 2021 and 2025, 157 projects require foreign investment in the following areas: transport infrastructure; industrial park and economic zone infrastructure; energy infrastructure; information technology infrastructure; waste and wastewater treatment systems; education and Health infrastructure; Cultural, sports and tourism infrastructure; Agriculture, forestry and fisheries; Manufacturing and services .

In terms of transportation infrastructure, there are some projects that require foreign investment, such as: Urban Railway (Metro) Line 4; Hon Khoai Universal Sea Port; Trang Bom-Hoa Hung Railway, Thong Nhat Railway Line; Deep Sea Port (Tran De port)…

In the field of industrial park and economic zone infrastructure, foreign investors are called upon to invest in the following projects: infrastructure construction and operation of the industrial zone in the northern part of Ben Luc County, and infrastructure construction and operation of the economic zone. Economic, construction and infrastructure business in Hening Industrial Park… .

In terms of education and health infrastructure, there are projects: the construction of a 1,000-bed general hospital in Hoa Lak under the investment project for the construction of Hanoi National University; the construction of an international university – Hanoi National University; the upgrade of Tuyen Quang Province General Hospital and Hoa An Shan District Medical Center, Haman District Health Center;…

The list of national investment projects for 2021-2025 includes, in addition to the project name, project objectives, implementation location, scale/specification, total investment, investment form, and contact address .

The Ministry of Planning and Investment is responsible for guiding and inspecting the implementation of this decision; Mainly responsible for and cooperating with ministries and localities to formulate detailed project information; Organizing publicity activities and popularizing the directory; Summarizing and reporting to the Prime Minister the progress of list projects; Based on the actual situation in each period , review and recommend additions or adjustments to the list; costs for carrying out activities in accordance with regulations .

6. Vietnam’s foreign investment situation in the first seven months of 2023

As of July 20, 2023, the new registered capital, adjusted and purchased shares and purchase capital contribution (GVMCP) of overseas investors (foreign investors) totaled nearly 16.24 billion US dollars, an increase of nearly 16.24 billion US dollars, an increase of 4.5% 2022 During the same period last year, it increased by 8.8 percentage points from the previous six months .

Among them, 1,627 projects were newly granted investment registration certificates (IRC) (a year-on-year increase of 75.5%), and the total registered capital reached nearly 7.94 billion U.S. dollars (a year-on-year increase of 38.6%); 736 investment capital projects were registered and adjusted (a year-on-year increase of 27.1%). The total investment capital was nearly US$4.16 billion (a year-on-year decrease of 42.5%); foreign investors participated in 1,627 stock brokerage transactions (a year-on-year decrease of 10.6%), and the total capital contribution exceeded US$4.14 billion (a year-on-year increase of 60.7%) .

Among the 21 industries of the national economy, foreign investors invested in 18 industries. Among them, the processing and manufacturing industry leads the way, with a total investment of more than 10.93 billion US dollars, accounting for more than 67.3% of the total registered capital, a year-on-year increase of 9.3%.

The real estate business ranked second, with total investment exceeding US$1.61 billion, accounting for more than 9.9% of the total registered capital, a year-on-year decrease of 49.8%. Banking and finance, professional activities, and science and technology ranked third and fourth, with total registered capital exceeding US$1.53 billion (nearly 63.9 times) and nearly US$737.6 million (an increase of 40.2%) respectively. The rest is left to other industries.

Judging from the number of newly started projects, manufacturing is also the leading industry in newly started projects (accounting for 31.1%) and capital adjustment (accounting for 55%). Wholesale and retail lead the number of GVMCP transactions (43%) .

In seven months of 2023, 94 countries and regions have invested in Vietnam. Among them, Singapore ranks first with a total investment of nearly 3.64 billion US dollars, accounting for more than 22.4% of Vietnam’s total investment, a decrease of 15.5% from the same period in 2022.

South Korea ranked second with nearly US$2.34 billion, accounting for 14.4% of total investment funds, a year-on-year decrease of 28.2%. China ranks third, with total registered investment exceeding US$2.33 billion, accounting for nearly 14.4% of total investment and a year-on-year increase of 77.8%. Followed by Japan, Hong Kong, Taiwan…

In terms of the number of projects, China leads in the number of newly opened projects (accounting for 20%). South Korea leads in the number of capital adjustments (26.2%) and GVMCP (28.5%) .

In the first seven months of 2023, foreign investors have invested in 52 provinces and cities across the country, with Hanoi ranking first with a total registered investment of more than 2.28 billion US dollars, accounting for nearly 14.1% of the total registered investment. The year-on-year growth in 2022 will be 2.76 times.

Haiphong ranked second with a total registered investment capital of more than 2 billion US dollars, accounting for more than 12.3% of the country’s total investment capital, a year-on-year increase of 96.5%. Next is the city. Ho Chi Minh City, Bac Giang Province, Binh Duong Province…

In terms of the number of projects, Ho Chi Minh City leads the country in the number of new projects (39.5%), the number of adjusted projects (24.7%) and GVMCP (69%) .

As of July 20, 2023, it is expected that the funds in place for foreign-invested projects will be approximately US$11.58 billion, a slight increase of 0.8% over the same period in 2022, and an increase of 0.3 percentage points over the previous six months .

The exports of the FDI sector (including crude oil) are expected to be nearly 143.83 billion US dollars, a year-on-year decrease of 10.4%, accounting for 73.7% of exports. Exports excluding crude oil were approximately US$142.67 billion, down 10.4%, accounting for 73.1% of the country’s exports.

The import value of the FDI sector is expected to exceed US$117.1 billion, a year-on-year decrease of 16.5%, accounting for 64.3% of the national import value.

Despite the decline in exports in the first seven months of 2023, the foreign investment sector still achieved a trade surplus of more than US$26.7 billion including crude oil, and a trade surplus of nearly US$25.6 billion excluding crude oil. At the same time, domestic corporate trade deficit was nearly US$13.7 billion.

“Quoc Bao Law Firm: Your Trusted Partner for Investment License and Various Permit Services”

Quoc Bao Law Firm is one of the leading law firms in Vietnam, renowned for its solid reputation and deep expertise in the legal field. We take pride in offering a comprehensive range of services related to investment licensing and various permits.

Our Services Include:

1. **Investment Licensing:** We specialize in assisting both domestic and foreign investors in obtaining investment licenses for their ventures in Vietnam. Our team of legal experts will guide you through the complex regulations and procedures to ensure a smooth and legally compliant process.
2. **Business Registration:** Whether you are establishing a new business entity, a branch office, or a representative office, we provide services to facilitate the registration process. We handle all necessary documentation and liaise with government authorities to ensure prompt and accurate registration.
3. **License Renewal and Compliance:** Staying compliant with Vietnamese laws and regulations is crucial for any business. We offer services for the renewal of various licenses and permits to ensure your business remains in good standing.
4. **Specialized Permits:** Depending on your industry, you may require specific permits such as import/export licenses, environmental permits, or licenses for specialized activities. Our experts are well-versed in these areas and can assist you in obtaining the necessary permits.
5. **Legal Consultation:** Our team of skilled lawyers provides valuable legal counsel on the intricate requirements and implications of various licenses and permits. We help you navigate the legal landscape, offering insights to make informed decisions.

Why Choose Quoc Bao Law Firm?

– **Experience:** With years of experience in the legal field, our firm has successfully assisted numerous clients in various industries in obtaining the required licenses and permits.

– **Expertise:** Our legal experts are well-versed in Vietnamese laws and regulations, ensuring that your applications are accurate and compliant.

– **Client-Centric Approach:** We prioritize the needs and objectives of our clients, tailoring our services to meet your specific requirements.

– **Efficiency:** We understand the importance of timely processing, and our team works diligently to expedite the licensing and permit procedures.

At Quoc Bao Law Firm, we are committed to simplifying the often complex legal procedures related to investment licensing and permits. We aim to provide you with peace of mind, knowing that your business operations in Vietnam are legally sound and in full compliance with local regulations.

Begin your journey of discovery regarding investment procedures in Vietnam, where opportunities await and success is not far away !

Do you need advice or support on what you are looking for ? For help setting up a business in Vietnam, investing, applying for temporary residence cards and visas, entry permits and work permits, please contact Vietnam Contact Luật Quốc Bảo .

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