Foreign investment exceeds US$33 billion in 11 months

HCMC – Vietnam has attracted US$4.85 billion of foreign investment this month, taking the total pledged capital in the year to date to more than US$33 billion, up nearly 83% year-on-year.

According to the Foreign Investment Agency under the Ministry of Planning and Investment, in the year to November 20, over 2,290 new projects had obtained investment certificates with total registered capital of US$19.8 billion, up 52% year-on-year.

Besides, 1,100 foreign-invested projects got approval to inject an additional US$8 billion, up nearly 58% year-on-year. There were more than 4,500 mergers and acquisitions (M&A) deals involving foreign investors with total capital contributions of about US$5.3 billion, up nearly 58%.

As such, the total amount of foreign investment this year to date has amounted to more than US$33 billion. It is estimated that foreign investment into the country would reach US$35 billion by the end of this year, far exceeding the Ministry of Planning and Investment’s expectation of US$28 billion.

The processing and manufacturing sector took the lead in attracting foreign funds in the 11 months, though its proportion tumbled. With nearly US$15 billion of foreign investment in January-October, this sector made up less than 50% of the country’s total, a sharp fall compared to its proportion of about 70% in the past few years.

Meanwhile, the power generation and distribution sector came second with total foreign investment of nearly US$8.4 billion, accounting for a quarter of the country’s total. Attracting US$2.5 billion, the real estate sector came third, making up nearly 8%.

As of November 20, foreign direct investment (FDI) projects had disbursed US$16 billion, up 11.9% over the same period last year.

In January-November, exports of FDI enterprises, including crude oil, reached nearly US$141 billion, up nearly 23% from the year-ago period and accounting for more than 72% of the country’s total export revenue.

Their imports have also risen by more than 23% year-on-year to nearly US$115 billion, making up 60% of the country’s total. This led to the FDI sector’s trade surplus of more than US$26 billion.

According to the Foreign Investment Agency, there have been 112 countries and territories investing in Vietnam this year to date.

Japan has surpassed South Korea to become the biggest investor with nearly US$9 billion, or 27% of the country’s total. South Korea came second with total registered capital of nearly US$8.2 billion and Singapore took the third position with US$4.7 billion.

Source: The Saigon Times

Read More

Challenges in Preparing Documents for Representative Office Application

The representative office (RO) is a popular foreign investment vehicle which investors utilize when wishing to enter the Vietnamese market without committing too much investment.  The representative office could help the foreign entity to hire local employee to carry out market research, business promotion.

A foreign company wishes to establish a representative office in Vietnam must submit an application dossier for a license to the Provincial Department of Industry and Trade (DIT).

However, there are cases which the government agencies receiving the application would be different from department of industry and trade depending on the business lines carried out by the foreign entity.

Firstly, the trade service is bound in Vietnam’s Commitment in trade service in WTO but there are no existing specialized legislative documents:

When the trade service which the foreign entity provides does not fall under areas prescribed by specialized legislative documents in Vietnam, the licensing agency shall submit a written request for directions to the relevant ministries for opinions. The foreign entity shall wait for at least 15 working days for receiving a written notice of whether the license for establishment of the representative office is granted or rejected. This process not only extends duration of establishment of representative office but also rises risk of rejection.

Secondly, the trade service is not yet bound in Vietnam’s Commitment:

Where the scope of operation of the representative office is inconsistent with Vietnam’s commitments or the foreign trader is not located in the country or territory being party to treaties to which Vietnam is a signatory, there is an extra process in registration of representative office. The representative office shall be approved by relevant ministers, heads of ministerial agencies for establishment of the representative office.

Thirdly, trade services are supplied in foreign countries, but such does not exist in Vietnam

The foreign entity has to apply codes as following to Vietnam standard industrial classification system or CPC. If the foreign entity can not define a code, it is merely impossible to register the representative office.

In most of the cases, the foreign entity should consult with law firm in Vietnam whom lawyers have expertise in WTO laws, law on investment and experience in working with Vietnam state authorities, to prepare application right at the start and be ready to challenge the authorities when required to protect best interests of the clients.

Read More

Travel firms want visa procedures simplified

HCMC – The Government should simplify the visa procedures for international tourists by issuing visas on arrival or e-visas to make the country more attractive to foreign guests, according to local travel firms.

More tourists from Japan, South Korea, the UK, Germany, France, Italy and Spain have come to Vietnam, reflecting the positive impact of the relaxed visa policy for visitors from these countries.

International tourists can get an entry visa on arrival in Laos, Cambodia and Thailand. For Vietnam, foreign tourists must ask travel agencies to complete all Vietnam visa procedures before arrival so that they can get a visa stamp at the border gate and make a fee payment, a process which is time-consuming.

Tien said last-minute tour bookings are popular now, so with the current visa issuance system, Vietnam may lose a lot of such tourists if applying for a visa remains complicated.

Though the Government permitted the issuance of e-visas since the beginning of this year, a large number of tourists have still requested travel agencies for help since the e-visa system has not worked smoothly, Tien said.

Sharing the same view, Lien Bang Travelink director Tu Quy Thanh said many existing problems make Vietnam’s visa policy less attractive.

In particular, international tourists to Phu Quoc Island off mainland Kien Giang Province are not required to apply for an entry visa but if they want to travel to other parts of the country, they will have to apply for a visa.

For international tourists who arrive at other airports than Phu Quoc, they must head to domestic terminals to fly on to the island, which costs airlines more time and human resources.  

According to the Tourism Advisory Board, Vietnam’s visa policy is not as liberal as other regional countries such as Thailand, Malaysia, Indonesia and the Philippines. Vietnam now waives entry visas for tourists from 23 countries and territories, but Thailand does that for 58 source markets, Malaysia 164, Singapore 160, Indonesia 169 and the Philippines 160.

Vietnam’s visa exemptions apply to short visits only, whereas tourists in the other countries can stay for up to 30 days or even 90 days in some cases.

Source: The Saigon Times

Read More

Vietnam’s energy sector faces tough competition

HANOI – Vietnam’s energy sector is facing tough competition with many countries in Asia and America since most energy giants have scaled down investment due to the low oil price, said Mark Edmunds, Southeast Asia Energy & Resources Industry Leader and Asia Pacific Oil & Gas Sector Leader for Deloitte.

Speaking to the Daily, Edmunds said many countries are struggling to attract foreign investors in the sector as the oil price has remained low over the past four years. Even big companies like ExxonMobil, BP and Shell have become choosy before entering a market.

To attract investors, authorities should consider important factors such as tax policies, business environment and administrative papers. With less capital moving around, companies are looking for shorter investment cycles to recover cash quickly.

Aside from Southeast Asia, Mexico is emerging as a new investment destination for oil giants. It has opened its market after prohibiting foreign investment for nearly 80 years.

Regarding power generation in Vietnam, Edmunds said the nation has seen many coal fired and hydropower plants. However, the Government is shifting to renewable energy sources such as solar, wind and natural gas.

The U.S. has improved air quality significantly thanks to the use of gas-fired electricity, while China and India are also following suit. This move would be good for Vietnam as well as a more balanced use of energy sources will help protect the environment.

At present, Vietnam still imports natural gas for domestic use. However, as the demand for natural gas continues to rise, the nation is expected to become a natural gas exporter in the future.

The expert said Vietnam is going on the right way for giving incentives to attract foreign investors into the energy sector. Earlier, many large enterprises have invested in Vietnam because of the qualified workforce and appropriate investment policies.

Under the current circumstances, the nation should invest in technology to develop its natural resources properly, and protect its natural gas reserves and the environment, Edmunds added.

Source: The SaiGon Times

Read More