Vietnam

Investing in Vietnam

FDI in figures | Why you should choose to invest in Vietnam | Procedures relative to foreign investment | Finding assistance for further information

FDI in figures

FDI influx has increased considerably since authorizing foreign investments in 1988, and reached record levels in 2008. Social-political stability and investment promotion play a crucial role in the increase of FDI influx. Nevertheless, FDI was affected by the global economic crisis in 2009. Up to August 2009, FDI showed a drop of 82% compared to the same period of the previous year.

Historically directed towards light industry, FDI in heavy industry and real estate is rapidly developing.

Despite the crisis, investment planners in Vietnam estimate significant growth in the capital of foreign direct investment. According to a survey carried out by the Asian Business Council, Vietnam is ranked in third position amongst Asian nations, in terms of investment attractiveness for the 2008/09 period, just behind China and India.

Some measure are still to be taken for the improvement of Vietnam's competitiveness and to attract more FDI, namely the improvement of its legal mechanism, the acceleration of the establishment of investment and company legislation, the intensification of the decentralization process, the creation of an incentive policy for the development of support industries and the facilitation of economic partnerships.

For more information, you can consult The Investment and Trade Promotion Center of Ho Chi Minh City (ITPC).

Foreign Direct Investment	2005	2006	2007
FDI inward flow (millions USD)	2,021	2,360	6,739
FDI stock (millions USD)	31,136	33,496	40,235
Performance Index*, ranking on 141 economies	58	78	43
Potential Index**, ranking on 141 economies	-	80	-
Number of Greenfield investments***	171	196	258
FDI inwards (in % of GFCF****)	11.6	11.6	25.4
FDI stock (in % of GDP)	58.8	55.0	56.3

Source: UNCTAD

Note: * The UNCTAD Inward FDI Performance index is based on a ratio of the country's share in global FDI inflows and its share in global GDP. ** The UNCTAD Inward FDI Potential index is based on 12 economic and structural variables such as GDP, foreign trade, FDI, infrastructures, energy use, R&D, education, country risk. *** Green field investments are a form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. **** Gross fixed capital formation (GFCF) measures the value of additions to fixed assets purchased by business, government and households less disposals of fixed assets sold off or scrapped.

Why you should choose to invest in Vietnam

Strong points: The country's strong points are:
- Positive economic prospects in terms of growth, despite the global crisis;
- A young, cheap, rapidly growing and more and more techonologically qualified manpower;
- A certain social-political stability;
- A government committed to liberalizing the economy and to introducing reforms based on the free market.
Weak points: The country's weak points are:
- Weak investment and financial freedom;
- The lack of gurantees for property rights;
- A high level of corruption (in the legal system, as well as for civil service).

Although it is undergoing reforms, the financial sector is neither well regulated nor independent of the government. Foreign investment is subject to an array of unclear regulations, which cannot be legally guaranteed. The judiciary is subject to political influence, and commercial cases often take years to be resolved.
Government measures to motivate or restrict FDI: The promotion of foreign investments is part of the country's development strategy. Therefore, the government has never stopped perfecting its judicial system, creating more incentives and taxation policies for foreign investors and trying to respect its commitments with regard to the international community. "Business forums" are frequently organized between the Vietnamese government and the private sector, these being opportunities for foreign investors to establish fruitful dialogue and to assert their interests. Additionally, Vietnamese efforts to maintain socio-political stability and set up and professionalize investment promotion activities also play a crucial role in increasing the FDI flow.

Procedures relative to foreign investment

Freedom of establishment: The Government has relentlessly perfected its legal system, created more incentive policies for foreign investors and tried to fulfill its commitments to the international community. Besides, Vietnam's efforts to maintain its socio-political stability and step up and professionalise investment promotion activities also play a crucial role in increasing the FDI flow.
Acquisition of holdings: Yes
Obligation to declare: It's obligatory to declare any FDI.
Competent organization for the declaration: Ministry of Foreign Affaires
Ministry of Planning and Investment
People Committee of the city which the investors want to work.
Requests for specific authorizations: Preferential investment field
Investment field with conditions
Investment - banned field