Vietnam: establishing a set of standards to assess the effectiveness of foreign investment

Vietnam: establishing a set of standards to assess the effectiveness of foreign investment

With regard to the draft Prime Minister’s Decision establishing a set of standards for assessing the effectiveness of foreign investment in Vietnam, the Ministry of Planning and Investment is collecting community comments.

According to the Ministry of Planning & Investment (MPI), the foreign investment sector has grown to be a significant component of the economy after drawing foreign investment for more than 30 years. Vietnam has also made progress over the years to bring in a new wave of foreign investment with greater quality and efficiency.

The foreign investment sector has expanded quickly and shown some success, which has helped the nation’s socioeconomic development. Foreign investment activities are becoming more prevalent, with participation from numerous multinational organizations and huge, technologically advanced businesses. Increases in state budget revenue, macroeconomic stability, production level and capacity, economic restructuring, the renovation of growth models, and an improvement in Vietnam’s position and reputation abroad are all results of larger investments and higher-quality projects.

Despite these successes, there are still certain drawbacks and weaknesses in the recent efforts to attract and exploit foreign investment. It is important to note right away how little productivity and technological transfer from the foreign investment sector to the domestic sector has occurred. In addition, there is a problem with the low ratio of realized investment capital to registered investment capital. Some foreign-invested businesses have not adhered strictly to the environmental protection laws in Vietnam. In order to evade paying taxes, some foreign-invested businesses also use transfer pricing and falsify financial accounts.

The majority of the current foreign investment reports analyze foreign investment based on the outcomes of attracting and exploiting foreign investment as well as the sector’s contribution to the economy. The effectiveness of attracting and exploiting foreign investment on a national, sectoral, and regional scale cannot be assessed using a single set of criteria that applies to all levels, industries, and locales.

As a result, given that Vietnam is transitioning to a foreign investment cooperation strategy that focuses on elements of quality, efficiency, technology, and environmental protection, it is imperative to research and develop criteria to evaluate the success of a foreign investment. To accurately evaluate the position, role, and contribution of the foreign investment sector to the nation’s socioeconomic development, to assess the achievement of objectives in foreign investment cooperation, and on the basis of those assessments, there is a basis for making appropriate decisions and policy solutions to effectively manage and use foreign investment capital for the appropriate socio-economic development in accordance with the specified objectives and directions.

Assess the FDI sector’s performance quality is the set of standards

The creation of a comprehensive legal foundation for organizing the implementation of regulations on assessing project efficiency toward the formation of a full post-audit method for foreign investment projects in particular and foreign investment capital flows in general requires the development of a set of standards detailing standards for the assessment of of foreign investment in Vietnam for synchronous and coherent application throughout the nation, locality, and industry.

The set of standards is a tool for assessing and evaluating the quality of the foreign investment sector’s activities so that appropriate policy changes can be made to support the objective of attracting investment into large-scale projects that are part of high-tech, cutting-edge, pervasive, high-value-added industries and positively impact the long-term socio-economic development of Vietnam.

The draft decision is divided into three articles that specify the regulation’s scope, the application of the regulation, the responsibilities of the relevant agencies, the enforcement effect, and appendices that contain specific criteria such as the name of the criterion, the unit of assessment, the content of the assessment method, the agency responsible for the assessment, the division of the standards, and the reporting period.

ASL LAW is the top-tier Vietnam law firm for doing business in Vietnam. If you need any advice, please contact us for further information or collaboration.


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