It is vital that Vietnam improves its investment climate to increase the flows of top-quality foreign direct investment (FDI) to the country, when most other Asian markets have also emerged as attractive destinations for FDI.

Although the Government announced plans to raise the quality of FDI in the country, while having concerns over environmental impacts, the country still lacks incentive policies to encourage businesses to invest in environmental protection.

Hirokaru Motohashi, vice president of the Association of Japanese Enterprises in Ho Chi Minh City, said investment policies and customs procedures were extremely complicated, making many Japanese enterprises reconsider previous plans to expand their operations in Vietnam with some of them shifting their investment to other countries.

Minister of Planning and Investment Bui Quang Vinh said at a recent conference that Vietnam was losing its advantages when trying to attract more FDI, such as cheap labor and natural resources, to Thailand and Indonesia.

Few improvements have been seen in developing infrastructure or simplifying administrative procedures, making the country’s investment environment less attractive, Vinh said.

In the first half of the year, FDI flow in the country reached nearly USD 10.5 billion, a year-on-year increase of 15.9 percent, with disbursement level estimated at USD 5.7 billion, up nearly six percent, according to the Ministry of Planning and Investment (MPI).

However, to improve the quality of FDI, Vietnam should attract more FDI in the processing and manufacturing industries, instead of the real estate market, said Do Nhat Hoang, director of the MPI’s Foreign Investment Agency.

(Source: www.vietnamlaw.vnanet.vn)