INVESTMENT CLIMATE STATEMENT VIETNAM 2013

 Vietnam has been very successful in attracting foreign direct investment, sustaining FDI levels around USD 10-11 billion a year over the last five years, up from almost nothing just a decade ago. Vietnam’s attractiveness to foreign investors resulted in large part from the country’s open government policies encouraging FDI, geographical position near global supply chains, political and economic stability, and abundant labor resources. Recently, however, international investors have voiced concerns that the investment climate has deteriorated. Problems include corruption and a weak legal infrastructure, financial instability, inadequate training and education systems, and conflicting and detrimental bureaucratic decision-making. Investors have called for immediate reforms and the development of sound economic policies in order for Vietnam to continue to attract good-quality foreign investment.

Openness to, and Restrictions Upon, Foreign Investment

Vietnam officially encourages foreign investment as part of its development strategy and the government has stated its commitment to improving the country’s business and investment climate. The Investment Law of 2005 provides the legal framework for foreign investment in Vietnam.

Vietnam became the 150th member of the World Trade Organization on January 11, 2007. Vietnam’s commitments under the WTO increase market access for exports of U.S. goods and services and establish greater transparency in regulatory and trade practices as well as a more level playing field between Vietnamese and foreign companies. Vietnam undertook commitments on goods (tariffs, quotas, and ceilings on agricultural subsidies) and services (provisions of access to Foreign Service providers and related conditions). It has also committed to implement agreements on intellectual property (TRIPS), investment measures (TRIMS), customs valuation, technical barriers to trade, sanitary and phyto-sanitary measures, import licensing provisions, anti-dumping and countervailing measures, and rules of origin. Vietnam has made progress in implementing its bilateral and international obligations; however, concerns remain in many areas such as protection of intellectual property rights (IPR) and effectiveness of the court/arbitration system.

The government of Vietnam (GVN) holds regular “business forum” meetings with the private sector, including both domestic and foreign businesses and business associations, to discuss issues of importance. Foreign investors use these meetings to draw attention to investment impediments in Vietnam. Together with frequent dialogues between GVN officials and foreign investors, have allowed foreign investors to comment on many legal and procedural reforms.

Despite the GVN’s stated commitment to improving the country’s business and investment climate, Vietnam is still transitioning from a centrally planned economy to a more market-oriented and private sector-based model. 

Bureau of Economic and Business Affairs

February 2013