To receive stronger flows of foreign direct investment (FDI), Vietnam has been mapping out new measures such as changing investment promotion modes, opening up more sectors for foreign investors, and unifying overlapping procedures and regulations.

"Following the government's instructions, we're changing the mode of investment promotion. Now, we focus on making lists of projects calling for foreign investment with as many details as possible, and introducing them to potential partners," the Foreign Investment Department under the Ministry of Planning and Investment told Xinhua recently.

Vietnam used to introduce laws, policies, incentives and lists of projects appealing for FDI in a general manner to a wide range of foreign companies. Now, the country centers on calling for investment of most potential investors in specific projects with details ranging from location, scope to preferential treatment.

"The Ministry of Planning and Investment is finalizing the list of several hundreds of national projects calling for FDI in the 2006-2010 period. However, only 60-70 key projects will be selected for investment promotion at national scale," the department said, noting that Vietnam has recently centered on investment promotion in countries which house many multinational companies and basic technologies such as the United States, Japan and some nations in the European Union.

Vietnam will set up an investment promotion fund under the umbrella of the Finance Ministry. The future fund is designated to not only promote investment at both central and local levels but also seek foreign official development assistance, the department stated.

To make Vietnam a more attractive land for potential investors, the ministry will adjust and build schemes on zoning industries, taking into consideration the possibility of allowing stronger foreign participation in such fields as transport, construction, culture, cement, electricity, education and vocational training.

In the best scenario, foreign partners in cement joint ventures can decide their proportions of investment capital contribution, instead of being limited to the current cap of less than 60 percent, a local investment expert predicted, adding that the 20- percent cap on investment capital contribution in the electricity industry could also be removed.

In a more realistic manner, Vietnam has already expressed its desire to have foreign involvement in some key projects with capital amounting to billions of US dollars, including iron exploitation in central Ha Tinh province, bauxite mining in central highlands Lam Dong province, and international container port construction in central Khanh Hoa province.

Besides investment promotion and a wider door to foreign participation in some important fields, Vietnam is creating more favorable conditions for foreign investors, mainly by simplifying investment procedures, diversifying investment modes, and reducing infrastructure costs covered by foreign-invested enterprises (FIEs) .

Under a recent instruction of the Vietnamese government, big cities like Hanoi and southern Ho Chi Minh City can license foreign-invested projects worth up to 40 million dollars, and other cities and provinces 20 million dollars. In the past, the respective figures were 10 million dollars and 5 million dollars.

The Ministry of Planning and Investment will select more FIEs to change them into joint stock companies which will enjoy the removal of differences in taxes, land rentals, and business regulations between FIEs and local firms.

The conversion is to diversify foreign investment, open up more capital mobilization channels, and help to unify the legal framework between foreign and domestic investment, the department said, noting that the Chinese Taiwanese-invested electric wire and cable producer Taya Vietnam went public in May, becoming the first equalized FIE in the country.

Vietnam has recently been actively in helping FIEs lower costs, mainly by applying the "single-price" mechanism on foreigners, slashing telecommunications charges, and financially assisting them in land rentals. Under the mechanism, foreigners in Vietnam pay the same charges of services as local people do.

The draft Unified Enterprise Law and the draft Common Law on Investment will be submitted to Vietnam's National Assembly for consideration late this year. The future laws will add uniformity to the country's legal framework and level the playing field for all economic actors, especially private and foreign sectors.

"Vietnam is likely to lure 5 billion dollars worth of FDI this year, much bigger than our target of 4.2-4.5 billion dollars," the department said, noting that the country attracted foreign investment of more than 4 billion dollars last year.

As of Aug. 20, Vietnam housed 5,617 operational FDI projects with total registered capital of nearly 48.2 billion dollars. Its biggest investors include Chinese Taiwan, Singapore, Japan and South Korea.

Source: Xinhua