Reviewing the policy of promoting foreign direct investment in Vietnam in the renovation process
In the early stages of national renewal, FDI promotion in our country was mainly about calling for investment. After the Asian financial crisis in 1997-1998, Vietnam began to expand FDI promotion to facilitating procedures for existing investors and gradually professionalizing investment promotion. The establishment of the Foreign Investment Agency under the Ministry of Planning and Investment (now the Ministry of Finance ) was a development step, making FDI promotion one of the important contents in state management of FDI in Vietnam.
To capture FDI capital flows from the effect of Vietnam's accession to the World Trade Organization (WTO) in 2007, the Government issued the Regulations on the development and implementation of the National FDI Promotion Program; accordingly, the annual and medium-term national FDI promotion programs are developed and implemented in the direction of attracting FDI. Decision No. 03/2014/QD-TTg, dated January 14, 2014, of the Prime Minister, promulgating the regulations on state management of investment promotion activities, has created a unified management framework for FDI promotion activities of ministries, sectors and localities. Previously, Decision No. 26/2012/QD-TTg, dated June 8, 2012, of the Prime Minister, promulgating the Regulations on the development and implementation of the National Investment Promotion Program, has initially established a number of regulations on investment promotion related to foreign investment in Vietnam.
Up to now, the policy framework for FDI promotion continues to be improved in terms of policies, guidelines, programs and plans. Notably, Resolution No. 50/NQ-TW, dated August 20, 2019, of the Politburo (12th tenure), "On the orientation of perfecting institutions and policies, improving the quality and effectiveness of foreign investment cooperation by 2030", has created a strong shift in FDI attraction thinking from quantity to quality; setting out major goals, viewpoints and orientations for FDI attraction, including FDI promotion orientation. To institutionalize this important resolution, the Investment Law and its implementing documents define policies, orientations, plans, programs, investment promotion activities, etc. At the same time, the Prime Minister has approved the Foreign Investment Cooperation Strategy for the period 2021 - 2030, issued the List of National Projects Calling for FDI for the period 2021 - 2025, including 157 projects with a total capital of about 86 billion USD in the fields of transport infrastructure, energy, information technology, environment, agricultural processing, etc. Departments, ministries, branches, and localities develop and implement FDI promotion programs and plans in accordance with the socio-economic development strategies and plans of the country, sectors, and localities.
The implementation of policies, programs and plans to promote FDI in recent times has contributed positively to positioning Vietnam as a safe and attractive investment destination. Basic information on policies, laws and the investment and business environment in Vietnam has been widely disseminated. FDI promotion representatives have been established in a number of countries, such as the US, Japan, Korea, Germany, France, etc. In addition to activities within the framework of the national investment promotion program, ministries, sectors and localities have proactively and actively organized events to promote and connect investment, sending FDI promotion delegations to a number of countries that are important investment partners to approach investors in priority areas. In particular, in the high-level foreign affairs program, FDI promotion has been increasingly promoted and achieved many important results.
To facilitate investment, the State has issued many documents on improving the business environment, administrative reform, and enhancing national competitiveness; in which, the focus is on cutting and simplifying business-related procedures, expanding the one-stop mechanism associated with digitizing records and documents... The national investment information system is an important digital platform in providing investment information, guidance and handling public administrative procedures online, helping investors save time and costs.
Policy dialogue, listening to investors' recommendations and proposals are increasingly receiving attention. The public-private dialogue mechanism, typically the Vietnam Business Forum (VBF), has actively contributed to improving policies, laws and the investment and business environment in Vietnam. Dialogue by sector, field and in some localities has contributed to resolving investors' difficulties. The policy dialogue and investor care model has been implemented by some ministries, sectors and localities, such as periodically holding dialogues with investors, establishing a one-stop mechanism to handle administrative procedures, establishing a specialized working group to handle investors' recommendations, proactively approaching and supporting international corporations planning to invest new or expand their investment in Vietnam, helping investors overcome difficulties after the COVID-19 pandemic, etc.
Thus, the institutional framework and policies for promoting FDI in Vietnam over nearly 40 years of implementing the renovation process have taken shape, gradually associated with the process of building and perfecting policies to attract and manage FDI. The implementation of FDI promotion policies has gradually shifted from passive to proactive with more diverse and synchronous investment promotion activities. Along with the improvement of institutions and policies in socio-economic fields (infrastructure, education - training, science - technology development, etc.), efforts to build, perfect and implement FDI promotion policies have made important contributions to the achievements of attracting FDI in Vietnam. Accumulated by the end of 2024, Vietnam has attracted about 42,000 valid FDI projects from more than 140 countries and territories with a total registered capital of about 500 billion USD, of which disbursed FDI capital reached more than 320 billion USD, equivalent to 64% of the total registered capital. The quality of FDI capital is improving, gradually shifting to sectors with higher added value and technology content. FDI promotion activities in recent years have reinforced the image of Vietnam as an attractive destination for foreign enterprises. According to a survey by the European Chamber of Commerce in Vietnam (EuroCham) in 2024, 75% of European business leaders in Vietnam affirmed that they will continue to prioritize choosing Vietnam for investment. EuroCham's Business Confidence Index survey showed that 31% of EuroCham member enterprises selected Vietnam as one of the top three investment destinations.
In addition to the important results achieved, Vietnam's FDI promotion policy still has some limitations in the face of the increasing demand for attracting FDI capital to serve the promotion of growth model innovation based on science - technology and innovation. The response to global investment trends in FDI promotion in recent times has not been really proactive and sensitive. Since the first decade of the 21st century, global investment has changed under the impact of the Fourth Industrial Revolution and strategic competition between major countries, however, Vietnam has not yet grasped the opportunities from these changes to target leading corporations with the need to shift supply chains and investments.
FDI promotion policies lack long-term strategy, promotion activities are mainly short-term, mass promotion instead of focused, key approaches by industry, field and priority partners. FDI promotion resources are still scattered, the connection between departments, ministries, branches and localities is not tight. The organization of FDI promotion abroad is not really professional and resources are scattered.
The limitations in FDI attraction results partly reflect the low effectiveness of FDI promotion. The FDI capital structure is still inadequate, focusing on the East Asia region while FDI capital from regions and countries with limited financial, technological and market potential. FDI capital in some priority sectors and fields in the socio-economic development orientation (infrastructure, high-tech agriculture, biotechnology, environment, etc.) has not met requirements and expectations.
The level of technology in FDI projects is generally limited, due to FDI promotion. Research, access, connection and care for high-tech investors are not effective. Experience drawn from the process of mobilizing a number of large technology corporations to invest in Vietnam (such as NVIDIA, Qualcomm, Foxconn...) in recent times shows that the reason why technology corporations are not really interested in Vietnam is mainly due to the lack of timely and complete information about policies and the investment environment in Vietnam, as well as the lack of a suitable "service package" on facilitating procedures, care and connection with domestic partners specifically for these corporations.
After-care services are getting more attention, but they still lack systematicity, method and depth. To date, there has been no professional investor care program with quality services. According to EuroCham's 2024 survey, one of the reasons why European Union (EU) investors are hesitant to expand their investment in Vietnam is because Vietnam has not really accompanied investors in implementing projects, and has been slow to respond and resolve investors' requests. In practice, administrative procedures and processes are still obstacles for FDI enterprises.
The above limitations stem from many causes, mainly subjective ones. For example, the thinking and awareness of all levels and sectors on FDI promotion are slow to innovate and are still passive; there is a lack of a comprehensive national strategy on FDI promotion as a basis for synchronous and consistent goals and orientations for attracting FDI. International investment research and forecasting have not kept up with new development trends in the world; in-depth research on new industries, fields, forms of investment and large corporations is still limited. Resources and capacity for FDI promotion have not met requirements; the team of FDI promotion officers has not been standardized in terms of expertise, profession, foreign languages, etc.
Perfecting policies to promote foreign direct investment in Vietnam in the new context
International investment is undergoing profound changes under the combined impact of many trends, directly the trend of strategic competition between major countries, the strong development of the Fourth Industrial Revolution, digital transformation, green transformation, etc. Although there are advantages and opportunities to take advantage of new FDI capital flows from this trend, especially the investment shift, restructuring of supply chains and production networks of many leading corporations in the world, Vietnam is facing increasingly fierce competition from many countries in attracting FDI associated with high technology and sustainable development. Countries in the region have been devoting a lot of resources to implementing FDI promotion strategies in the field of new environmentally friendly technology; at the same time, promoting the improvement of the investment environment, modernizing the "one-stop" mechanism, strongly digitizing procedures, investment support services, etc.
After nearly 40 years of implementing the renovation process, Vietnam is preparing to enter the era of national development with the goal and vision of becoming a developing country with modern industry and high average income by 2030 and a developed country with high income by 2045, placing increasingly high requirements on attracting FDI in terms of quantity, quality and efficiency. With the new position and strength, Vietnam has a great opportunity to attract quality FDI when many countries and partners value Vietnam's position in the strategy and policy for the region, evaluating Vietnam as a reliable partner, friend and a safe destination for investment and production. The newly established and upgraded partnership frameworks and the signed network of free trade agreements (FTAs) are opening up great opportunities for Vietnam to expand and improve the quality and effectiveness of trade-investment, science-technology cooperation, diversify and multilateralize FDI capital sources, especially FDI from partners with financial and technological potential. To take advantage of strategic opportunities to serve the country's rapid and sustainable development in the new era, innovation in thinking, and improvement of FDI attraction policies in general and FDI promotion policies in particular play a very important role.
To perfect FDI promotion policy in our country, some orientations and solutions need to be considered to perfect FDI promotion policy in our country as follows:
Firstly , shifting FDI promotion from mass to highly proactive, strategic, focused and key FDI promotion in terms of industries, sectors and partners on the basis of taking quality and efficiency as the top criteria; from promoting and advertising the investment and business environment as the main focus to synchronously and effectively implementing the building of national brands and images, investment facilitation, support services, care, promoting linkages and investment policy dialogue. Accordingly, it is necessary to research, develop and implement a comprehensive national strategy on FDI promotion, in which clearly and consistently positioning the Vietnamese brand as a safe, investor-friendly investment destination with high connectivity, promoting sustainable development and innovation.
Identifying the right sectors, fields and priority partners in the FDI promotion strategy plays a very important role, because this is the basis for allocating and using FDI promotion resources reasonably. In addition, it is necessary to review and evaluate the overall sectors and fields of the economy, on that basis, select priority sectors and fields for FDI promotion, ensuring that they are consistent with the country's development goals and orientations, and have the ability to create spillover effects through increasing value and linking with domestic economic sectors. Identifying priority partners for FDI promotion needs to be approached from both the perspective of geographical area and the partner's ability to meet the goals, orientations and requirements for attracting FDI.
Second , develop and implement programs and plans to promote FDI in priority sectors, fields and partners on the basis of concretizing the overall national strategy on FDI promotion. In which: 1- Clearly identify international corporations that need to proactively approach and promote and domestic enterprises that are capable of cooperating and linking with international corporations. If there is a mechanism to attract domestic enterprises to participate in FDI promotion activities within the framework of programs and plans to promote priority sectors and fields, FDI promotion activities will be more effective; 2- Develop proposals for specific policy packages (offers) in each priority sector and field with a framework of preferential policies, investor support services and specific criteria for enjoying incentives for unified implementation, contributing to overcoming the situation of "bottom-up competition" among localities in promoting and attracting FDI; 3- Identify a list of key projects to attract FDI in priority sectors and fields, especially national-level projects, to create widespread impacts or new developments in priority sectors and fields.
Third , innovate and improve the quality of investment services in a professional and modern direction. Practice shows that post-investment care services are often less expensive than massive investment promotion campaigns. To ensure that foreign investors are taken care of while resources are limited, it is necessary to develop a focused, key post-investment care program, including: 1- Basic care package for all investors; 2- Enhanced care package only for priority investors who are implementing projects with high added value and/or widespread impact (such as technology transfer, association with domestic enterprises, etc.). For some strategic investors in priority areas, it is necessary to establish specialized groups and working groups to support investors.
Research on establishing a Systemic Investor Response Mechanism (SIRM) to monitor and manage issues of concern to investors, contributing to strengthening investor confidence and minimizing disputes. It is necessary to unify the focal agency to receive and evaluate investors' problems; at the same time, there must be a mechanism for coordination and timely and smooth information between relevant agencies at the central and local levels in responding to and resolving investors' concerns and problems.
Wednesday, Strengthening FDI promotion in economic diplomacy implementation. The focus is on promoting the role of Vietnamese representative agencies and trade offices abroad in approaching and expanding the network of strategic or potential investors in key areas; strengthening coordination in preparing and organizing forums and events to promote FDI in a practical manner, with specific results in high-level foreign affairs activities; promoting the expansion and deepening of cooperation with prestigious international investment promotion agencies and associations, such as the Japan International Cooperation Agency (JICA), the Korea International Cooperation Agency (KOICA), the German Development Cooperation Organization (GIZ), the Singapore Economic Development Board (EDB), EuroCham, etc. in coordinating to organize joint investment promotion (twin-promotion), supporting the improvement of investment promotion and advertising capacity, policy dialogue, and providing services to investors.
Thursday, Digital transformation is dramatically changing the way FDI is promoted, with digitalization applied to most FDI promotion content, from advertising, investment information to facilitating procedures and taking care of investors. According to a survey by the Organization for Economic Cooperation and Development (OECD) in 2021, nearly 100% of investment promotion agencies in OECD countries use social networks to promote FDI, more than 90% of agencies organize online investment promotion conferences and seminars, more than 80% of agencies have reduced the number of delegations going abroad to promote investment thanks to digital transformation, nearly 50% of agencies use big data to analyze investor behavior, more than 30% of agencies handle investment licensing procedures entirely in the digital environment, more than 20% of agencies use artificial intelligence (AI) as a "virtual assistant" to support investors.
In Vietnam's context, in addition to promoting administrative procedure reform associated with digital transformation, it is necessary to promote digital transformation in FDI promotion, especially in information and investor support. Accordingly, it is necessary to soon research and build a multilingual "national investment one-stop portal" on the basis of integrating unified information functions (policies, laws, investment environment, etc.), handling administrative procedures related to investment, necessary databases for investors (planning, domestic suppliers, priority industries/sectors, national priority projects, etc.), a highly interactive system for receiving and responding to investors' concerns, interconnected with national, ministerial, sectoral and local information portals. In addition, it is necessary to increase the use of digital technology in foreign investor relations management (CRM) and investment promotion and communication to improve the quality of investor care and communication effectiveness.
Sixth , improve the capacity to promote FDI in a professional, modern and effective manner. Continue to arrange and streamline the apparatus of investment promotion agencies at the central and local levels, along with innovating and modernizing the governance and operation models, and improving efficiency. In addition, it is possible to refer to international experience to choose a suitable model for organizing investment promotion agencies in our country. Research and empirical surveys by prestigious international organizations (1) show that effective investment promotion agencies in the world have a high degree of autonomy and/or are organized according to a governance model that combines the state and the private sector.
In addition, improve and enhance the operational efficiency of FDI promotion representatives abroad; soon build a common platform for information sharing and coordination between domestic investment promotion agencies with FDI promotion representatives and Vietnamese representative agencies abroad. Build a team of professional FDI promotion officers, proficient in skills, expertise and foreign languages, especially local officers, on the basis of innovation, improving the quality of training and fostering investment promotion officers in the direction of specializing in investment policies and laws, mastering basic skills (negotiation, consulting, communication - marketing, ...).
FDI promotion policy plays an important role in attracting and managing FDI. To take advantage of favorable opportunities to attract quality FDI capital flows, it is necessary to strongly innovate thinking and perfect FDI promotion policies with a long-term, professional, synchronous and modern vision. Perfecting FDI promotion policies needs to be placed in the overall development and perfection of socio-economic policies and laws, directly investment policies and laws. This will contribute significantly to creating a new step forward in attracting FDI capital to realize the vision, goals and development orientation of the country in the new era, the era of national development./.
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(1) World Bank (WB), Organization for Economic Cooperation and Development (OECD)...
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