Vietnamese officials have pledged to fulfill the commitments to improve the country’s investment environment and its competitiveness. The commitments were made at the Vietnam Investment Roundtable in Ho Chi Minh city on July 6-7, 2004, which rallied foreign investors, policy-makers, businessmen along with economists and analysts. Vietnam Law & Legal Forum hereby introduces some of those commitments through excerpts of speeches delivered by the Vietnamese officials at the meeting.
Permanent Deputy Prime Minister Nguyen Tan Dung:
“In furtherance of the policies on renewal, door opening and integration into the regional and world economies, the Vietnamese Government has made great efforts to reform the country’s economy along the following major directions:
- Continuing to perfect the institution of the market economy, improving business environment, creating conditions for enterprises of all economic sectors to raise their business efficiency and competitiveness; vigorously promoting the potentials of people-financed business sector through creating a healthy cooperative and competitive environment for all sectors, eliminating the discrimination against people-financed business sector, first of all, in the use of land and access to the State’s credits.
- Making new progress in restructuring and renovating State enterprises, and raising their efficiency, with attention paid to boosting the equitization of these enterprises on a wider scale to cover a number of corporations as well as large and profitable enterprises.
- Further boosting the development of assorted markets, including capital market, real estate market, service market, science-technology market and labor market, etc., while consolidating the financial and banking system and renewing economic management instruments along the direction of competition and integration with the world economy.
- Stepping up the implementation of the 2001-2010 overall program on the State administrative reform through perfecting the organization and raising the capability of administrations of different levels; renovating the management mechanism for non-business public units; reforming wages; combating bureaucracy, corruption and negative phenomena, tightening administrative discipline.
- Continuing to improve the investment environment with a view to raising the competitiveness in attraction and use of foreign investment capital along the direction of building an uniform Investment Protection and Promotion Law applicable to both domestic and foreign investments; expanding the business rights of foreign-invested enterprises according to Vietnam’s commitments to open its market; expanding foreign investment domains and forms; expeditiously removing difficulties and obstacles in activities of foreign-invested enterprises; promptly amending a number of inappropriate regulations in the decrees guiding the implementation of tax and labor-recruitment policies so as to ensure the consistency and uniformity of the foreign investment promotion policies which Vietnam has committed to.
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Of the above-mentioned orientations, international integration in investment constitutes one of the important solutions being taken by the Vietnamese Government to improve the investment environment. This solution has been undertaken along three following directions:
First, Vietnam has been taking initiative in building and perfecting the country’s legal system in order to step by step make it conform to international customs and practices.
Vietnam’s Foreign Investment Law has been substantially improved through amendments and supplements over the last 15 years, in 1990, 1992, 1996 and June 2000. One of the most important objectives of the amendment and supplementation is to ensure the compatibility of the country’s foreign investment law and policies with international customs and practices. Vietnam’s law provisions, therefore, are becoming more perfect, conforming to the trend of international economic integration, contributing to creating an investment environment favorable, transparent and equal for enterprises of all economic sectors.
Second, Vietnam has been effectively participating in bilateral, regional and international legal mechanisms regulating foreign investment.
To date, the Vietnamese Government has signed bilateral agreements on investment promotion and protection with 47 countries and territories. Notably, with the signing of the Vietnam-US Bilateral Trade Agreement, a separate chapter of which is devoted to the development of investment relations, Vietnam has committed to comply with the highest-ever investment treatment standard. Within the multilateral cooperation framework, Vietnam has signed the ASEAN Investment Framework Agreement, participated in Asia-Europe Investment Promotion Program of Action and adopted a national action program on investment liberalization within APEC.
Vietnam’s international commitments on foreign investment, though varied in forms and levels, are all aimed at liberalizing foreign investment activities through opening economic domains, not discriminating foreign investors, establishing a mechanism of investment promotion and protection and dispute settlement within a given duration in accordance with international practices.
By the way, I would also like to inform you that at the 8th session of the negotiation on its accession to the World Trade Organization (WTO), Vietnam already committed to implement, right at the time of accession, almost all WTO’s agreements, including the Agreement on Trade-Related Investment Measures. In its new offer on opening the service market, Vietnam committed to step by step create opportunities for foreign investors to approach markets in 10 of the 11 services classified by WTO. This is a great effort of the Vietnamese Government, especially in the context of the country’s low-level economic development and limited competitiveness of enterprises.
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Third, Vietnam is step by step narrowing the gap between domestic and foreign investments, aimed at proceeding to build a common legal ground for enterprises of all types.
As you know, in the past years, there existed in Vietnam two separate legal systems regulating domestic investment and foreign investment respectively, which were different in terms of enterprise founding, organization and operation management, extent of participation in the market as well as prices, service charges, labor recruitment, tax policies and land rents, etc. The amendment of the Foreign Investment Law has considerably narrowed this gap of “discrimination”. To date, we have eliminated the discrimination regarding prices and charges of a number of goods and services and expect to basically complete the price and charge adjustment roadmap by 2005. In 2003, the Government issued a Decree allowing the transformation of a number of foreign-invested enterprises into joint-stock companies, which are organized, managed and operate after a model similar to that prescribed for domestic investors.
Besides, functional agencies are studying and elaborating a common investment law applicable to all enterprises, irrespective of their ownership forms. This is also a new progress in the ongoing process of eliminating the difference between domestic and foreign investment policies.
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We realize clearly that the execution of commitments on international economic integration in general, and investment integration in particular, is not only the international community’s requirement for Vietnam but also an urgent requirement for the Vietnamese Government to improve the country’s investment environment in order to raise its competitiveness and attract foreign investment. Foreign investment constitutes an integral part of Vietnam’s economy.
In that spirit, at this conference, I would like to reiterate the Vietnamese Government’s determination to materialize the policy of renewal, economic reform and active integration into the regional and world economies, for the purpose of building trade and investment relations, which are more stable and transparent and freer for all trade and investment parties.”
Vice Minister of Labor, War Invalids and Social Affairs Le Duy Dong:
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First, pending the submission to the Government of amendments to Article 3 of the Government’s Decree No. 105/2003/ND-CP of September 17, 2003 detailing and guiding a number of articles of the Labor Code on the recruitment and management of foreign laborers in Vietnam, Circular No. 04/2004/TT-BLDTBXH of March 10, 2004 guides as follows:
- Enterprises having more than 50 foreign laborers may employ another 50% of this limit of 50 laborers.
- For enterprises having recruited foreign laborers before October 7, 2003- the effective date of Decree No. 105/2003/ND-CP, the employers may continue using these laborers till the end of the already signed labor contracts or till the expiry of the granted work permits.
- For foreign investment projects already licensed by the Vietnamese competent agencies before October 7, 2003, the recruitment of foreign laborers shall comply with their personnel plans already approved under the projects.
In the immediate future, after consulting the concerned ministries, branches, localities and investors, the Ministry of Labor, War Invalids and Social Affairs shall submit to the Government amendments to Article 3 of Decree No. 105/2003/ND-CP along the direction of assigning the presidents of the provincial/municipal People’s Committees to consider and decide on allowing enterprises to recruit more laborers than the prescribed number if they have a demand therefor, or to consider the annulment of the provisions on the maximum number.
Second, regarding human resource development, we are boosting the work of vocational-training, building up a vocational-training network and diversifying the vocational-training forms to include foreign-invested vocational-training schools. Particularly, some vocational-training schools to train skilled workers have been built in Ho Chi Minh city and a number of other big cities.
Third, importance shall be attached to the development of domestic labor market, first of all, in 3 key economic zones in northern, central and southern Vietnam, with particular importance being attached to the labor market development in Ho Chi Minh city. For this end, one of the most important solutions is to build a system of labor market information and labor consultancy; rearrange and reorganize job-placement centers, set up and operating under the Labor Code; and continue reforming administrative procedures to meet the demands of, and create the most favorable conditions for, enterprises.”
Vice Minister of Industry Nguyen Xuan Thuy:
“To ensure that energy is a business production branch and also an important infrastructure industry, which, at the same time, plays the role of a motive force for national socio-economic development, the national energy development policy has been determined for the 2010-2020 period as follows:
- To develop the energy industry in order to meet the socio-economic development requirements, ensuring the national energy security.
Major objectives to 2020 are:
For electricity:
+/ To meet the national electricity demand for around 93-100 billion kWh by 2010 and 200-230 billion kWh by 2020;
+/ To increase the national power source capacity by around 1,500-1,800 MW annually, which demands an investment capital of around USD 2 billion/year.
For coal:
- Up to 2010: To invest in the improvement, expansion and building of mines so as to raise the production output to 23-24 million tons by 2010.
- Up to 2020: To achieve an output of between 30-40 million tons by 2020.
For oil and gas:
To achieve an exploitation output of between 30-32 million tons by 2010, of which the crude oil output will be around 18-21 million tons and gas- around 12-14 billion m3.
To attain the above-said targets, the Government has ratified the electricity/coal and oil and gas development plans for the period up to 2020, under which diversifying investment forms, expanding international investment cooperation and calling for domestic and foreign organizations and individuals to join Vietnam Electricity Corporation, Vietnam Coal Corporation and Vietnam Oil and Gas Corporation in investment development of electricity, coal, oil and gas industries constitute one of the strategic orientations and important policies. More concretely:
- For electricity industry: To call for investment in power sources, distribution network and research and development of new kind of energy, recreated energy.
- For oil and gas industry: To call for investors to participate in oil and gas prospection and exploration, and invest in building gas pipelines and development of Vietnam oil and gas industry.
- For coal industry: To call for investment in deep coal prospection and exploration (-300m/-600m -700m) in Quang Ninh province and Red River delta.
For their part, the Government, the Ministry of Industry and the concerned ministries and branches commit to create favorable conditions for investors in terms of information provision, administrative procedures as well as tax and land preferences and stability.”
Vice-Chairman of the State Securities Commission Vu Bang:
“First, to continue perfecting the environment of investment in the securities market, making Vietnam’s securities market more attractive to investors. Concretely:
- Perfecting the legal framework and market development policy,
- Increasing commodities for the market,
- Diversifying modes of issuance of the Government bonds,
- Combining the equitization of State enterprises with the issuance of shares to the public and listings on the securities market,
- Selecting big enterprises and joint-stock commercial banks that fully meet the conditions for equitization and listing on the securities market,
- Developing intermediary financial institutions,
- Developing a system of securities investors,
- Perfecting the securities trading market, and
- Enhancing the State management capacity,…
Second, to perfect policies to encourage foreign investors’ participation in Vietnam’s securities market: To research into the extension of the share-holding limit for foreign investors within a certain time period compatible with the economic integration process and cooperation commitments on capital market development between the regional countries, as well as international practices; to perfect tax, charge and fee policies along the direction of giving equal treatment to foreign investors and domestic investors when they join in the market; to coordinate with the State Bank in adjusting the foreign exchange management policy for securities trading activities on Vietnam’s securities market; to issue a Circular guiding Decree No.144 on securities transactions along the direction of simplifying procedures for foreign investors’ transactions; to provide detailed guidance on allowing foreign securities trading organizations to contribute capital to, and buy shares from, domestic securities companies or fund managing companies, and to transfer shares and capital contributions under law provisions.”
Deputy Governor of the State Bank Tran Minh Tuan:
“The State Bank shall apply the following solutions: (1) To coordinate with the ministries and branches in synchronously implementing solutions to the financial-monetary market development; (2) to continue perfecting instruments for management of the monetary policies in order to flexibly regulate and control the development of the monetary market; (3) to perfect the mechanism for regulation of floating foreign exchange rates and widely apply anti-risk instruments in accordance with international practices; (4) on the basis of the newly-issued land, economic, administrative and civil legislation, to adopt new credit, loan guarantee and foreign exchange management mechanisms; (5) to step up the reorganization and modernization of domestic commercial banks to make them capable of competing with others and providing high-quality banking services according to international practices; (6) to continue studying and removing restrictions on foreign credit institutions operating in Vietnam, in conformity with the international integration trend and roadmap, creating conditions for foreign credit institutions to operate efficiently and make more contributions to the development of Vietnam’s economy.”
Deputy Director of the Trade Ministry’s Planning and Investment Department Pham Sy Chung:
“To assure an environment convenient for import-export activities, thus raising the efficiency of export by FDI enterprises and achieving the import-export targets of 2004 and the coming years, in service of the national economic development objectives, the Ministry of Trade has been actively coordinating with other ministries and branches in working out strategic solutions and concretizing them into trade policies for practical application along the following directions:
1. Fulfilling international commitments on import licensing
To execute the program of action for implementation of WTO’s Agreement on import licensing at the 7th session of the working commission on Vietnam’s accession to WTO, the Ministry of Trade is drafting a decision for issuance by the Prime Minister, which will simplify and clarify the import-licensing order and procedures for Vietnamese enterprises, including FDI enterprises.
2. Giving equal treatment to FDI enterprises and Vietnamese enterprises regarding the procedures for importation of production raw materials and materials
For implementation of the commitments in the Vietnam-US Bilateral Trade Agreement and WTO’s Agreement on import licensing, the Trade Ministry is drafting for submission to the Prime Minister the annulment of the approval of FDI enterprises’ annual plans on the import of spare parts, accessories, production raw materials and materials. The annulment of such approval will allow FDI enterprises to directly fill in the import procedures for production raw materials and materials (except for raw materials exempt from import tax for 5 years, goods imported as fixed assets and goods imported for product marketing and introduction) at the customs offices like Vietnamese enterprises.
3. Gradually extending business rights for FDI enterprises
Apart from the right to directly export or entrust the export of goods produced or procured at home by enterprises themselves according to commitments in the bilateral and multilateral agreements on investment encouragement and protection as well as the investment-related trade agreements, the Vietnamese Government shall step by step extend business rights for FDI enterprises in the fields of service, import, domestic distribution, transportation, and post and telecommunications”.-