By Nga Dao | June 14, 2022, 2.00pm
Vietnam’s Deputy Prime Minister Pham Binh Minh has signed off Decision 667/QD-TTg approving the Strategy for foreign investment cooperation in the 2021-2030 period. The Strategy was issued following Resolution 50-NQ/TW of the Politburo (the highest body of the Communist Party of Vietnam) on attracting FDI, and the Government’s Resolution 58/NQ-CP of April 27, 2020 promulgating an action plan for the implementation of Resolution 50-NQ/TW. In all the documents, technology is a key word that appears in every section, from propositions and objectives to solutions and tasks. It is obvious that technology is considered as a key to unlock investment potentials and opportunities for Vietnam.
The new Strategy states clearly that Vietnam wants to “reposition investment flows, reduce dependence on markets with high risks and potential for disputes; prioritize connection to the global supply chain; attract green investments, high technologies, auxiliary technologies, advanced management and governance methods.” Accordingly, the Government would encourage projects using advanced technologies, new technologies, high technologies, and clean technologies. Improving institutions and regulations, developing transport and telecommunication infrastructure, developing an ecosystem for science-technology and innovation, and increasing the quality of human resources are listed among major solutions that the Government would implement in order to improve the business environment and attract foreign investment.
More specifically, investors in the technology sector can expect the following:
- Further removal or reduction of investment and business conditions which are deemed unreasonable or unnecessary and increased application of post-inspection principle to certain business lines.
- More policies and regulations on the development of e-Government, digital government and digital economy.
- More incentives for investments in telecommunication infrastructure, industrial parks and hi-tech parks as well as the development of science-technology market.
- Higher technical standards and requirements on products, environmental protection and energy efficiency, to be harmonized with regional and international standards.
- Further supports for startups and SMEs to access FDI, especially in the areas of high technology, manufacturing industry, information technology and financial services.
- Policies and mechanisms to encourage capacity-building projects/initiatives and cooperation between foreign companies and domestic institutions on education and training.
While promising to enable numerous business and investment opportunities, the Strategy also mentions several of the Government’s intentions that require foreign investors to keep an eye on related developments as part of preparation of their business development plans in Vietnam. These include:
- Stricter control of acquisitions (especially when related to big domestic companies and those operating in strategic industries) and projects that might be considered as affecting public order, defense and security.
- Revision of regulations and mechanisms which are deemed as creating inequality between domestic and foreign players or institutional inconsistencies.
- Revision of tariff and non-tariff barriers to implement Vietnam’s international commitments on one hand and protect the interests of domestic enterprises on the other hand.
In summary, after more than 30 years of attracting foreign investment and gaining various economic successes, Vietnam is shifting its strategic direction and policy to reposition itself on the world’s FDI map. The country now wants to be seen as a cooperation partner of foreign investors rather than just an investment receiver and user. It also means that the FDI attraction will be more selective and priority will be given to quality rather than quantity of investments. There might be less preferences or more requirements for foreign investors in a number of sectors as the Government is also under the pressure of supporting domestic companies and balancing interests of the involved parties.
Given the Government of Vietnam’s new FDI strategy and ongoing digital transformation agenda, there will be both opportunities and challenges for foreign tech companies to make investment and do business in the country. It’s recommended that they closely monitor both investment and ICT regulatory environments in order to be promptly and well informed of relevant changes and make adjustments if necessary.