By applying a one-stop shop mechanism, the southern province of Dong Nai’s FDI has doubled the target set for 2007. Judging from the above example, WB Country Director to Vietnam Ajay Chhibber pointed out that Vietnam should make a breakthrough in administrative reform to attract more foreign investment.

At a recent press briefing prior to the Consultative Group (CG) Meeting for Vietnam, Mr Ajay said 2007 marks a memorable year for Vietnam as its FDI has hit a record high. The disbursement of FDI accounts for 6.8 percent of GDP, a much higher rate than China as a result of the country’s effective reforms.

The United Nations Conference on Trade and Development (UNCTAD) recently released the results of a survey showing that Vietnam now ranks sixth as an investment opportunity from in a total of 141 economies surveyed, just behind China, India, the US, Russia and Brazil.

Big obstacles

Ajay Chhhibber pointed out three main obstacles needed to be overcome. The Government and businesses must find measures to develop infrastructure, especially transport and electric systems. In addition, the Government should further accelerate administrative reform to eliminate bureaucracy in state-owned agencies and pay more attention to training a highly-skilled labour force, Mr Chhibber said.

Sharing the same view, Alain Cany, chairman of the European Chamber of Commerce (EuroCham) praised the Vietnamese Government’s decision to remove the 3 percent limitation on the recruitment of foreign workers. He said the decision will help meet the demand for a highly skilled work force.

Mr Cany said education reform is an essential task that would make Vietnam more dynamic in the future. But this depends on the quality of its education and training. Mr Canny pledged to provide the Vietnamese Government with further support to resolve the issue.

In a report released at a recent Vietnam Business Forum, Sin Foong Wong cited infrastructure, intellectual property protection, efficiency of administrative services, the tax system and management of taxes, highly skilled labour and the legal environment as issues of concern to the businesses community.

However, Mr Sin pointed out the difference between domestic and foreign businesses. He said that while domestic businesses are paying more attention to removing unnecessary licences and controlling corruption, foreign businesses are more concerned about improving the drafting and implementation of laws.

Determination and prospect

Speaking to hundreds of domestic and foreign businesses at the Vietnam Business Forum, Minister of Planning and Investment Vo Hong Phuc affirmed that with its strong determination to go through reform in the Doi Moi (Renewal) process, the Vietnamese Government is willing to hold an open dialogue with both domestic and foreign businesses. Mr Phuc said that the Government is implementing measures to boost infrastructural development and administrative reform to create favourable conditions for investors to access financial sources, land and services.

In addition to ODA, overseas remittances and domestic investment have increased dramatically. The Government’s reforms and strong commitments have helped attract more foreign investors to do businesses in Vietnam.

At the ASEAN Forum which was held in Hanoi in November, Herve Novelli, State Secretary in charge of France’s foreign trade and enterprises said that the number of German investors in Vietnam is three time bigger than that of France and he considered it as a challenge to the French Government and business community to overcome. Mr Novelli affirmed that French businesses are quite capable of improving their position in the region.

Regarding the rapid attraction of foreign investors in Vietnam, Thailand’s The Nation newspaper wrote that Vietnam is developing strongly to catch up with Thailand. It quoted the Chairman of the Thailand-Vietnam Business Association Preechachai Chauychoo as saying that Vietnam only needs one decade to surpass the current Thai level of development.