Receiving high quality FDI waves from EU

Wednesday, 2019-07-31 18:27:03
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NDO – The signing of two important agreements, including the EU - Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA), not only opens a new chapter in trade and investment relations between the two economies but also makes Vietnam become a focal point of global trade and investment flows. It is forecasted that the implementation of the two agreements will create a big change in the flow of foreign direct investment (FDI) from the EU into Vietnam in the coming time.

New-generation FDI attraction strategy

It is worth noting that at the same time that the EVFTA and EVIPA were signed, the Politburo is considering issuing a Resolution on new-generation foreign direct investment (FDI) attraction. After 30 years of attracting FDI, this is the first time that the Politburo has a specialized resolution aimed at the target of attracting selective FDI, in line with the process of restructuring the Vietnamese economy, renewing the growth model, and promoting benefits as well as limiting the inadequacies of FDI.

According to Deputy Minister of Planning and Investment Vu Dai Thang, in order to realise the Resolution of the Politburo, the Ministry of Planning and Investment (MPI) is coordinating with agencies to submit to the Government a proposal on foreign investment strategy in the near future. In which, there will be a very important change in the viewpoint of FDI attraction in Vietnam. Specifically, the transition from attracting investment horizontally to attracting selective investment in depth and investing in the fields of science and technology, creating a link between foreign investors and domestic businesses. Priority is given to projects with higher added value, advanced technology, modern administration, connecting global supply chains and having a pervasive and organic impact on the domestic economic sector.

So far, Vietnam has signed more than 60 investment protection agreements (IPA) with other countries, but EVIPA has some new, more detailed and balanced points compared to the investment protection agreements that Vietnam has signed with previous partners. In particular, the principle of a dispute resolution through a two-level permanent mechanism is different from that of the previous agreements. Therefore, EU investors will feel safer when pouring capital into Vietnam, and will choose Vietnam through the framework of EVFTA, EVIPA to be able to participate in the markets of ASEAN as well as CPTPP.

According to the MPI, EVIPA will promote FDI inflows from the EU into Vietnam, the level of liberalization of EU investment in Vietnam will be increased, especially in some professional services and services of finance, telecommunications, transport and distribution. It will also help Vietnam improve the quality of foreign investment, attract more investors in some industries that the EU has potential in such as processing and manufacturing industries using high technology, clean energy, renewable energy, high quality services, financial and banking services. In addition, the commitment on direct investment liberalisation in EVFTA and the commitment on investment protection in EVIPA helps Vietnam continue to renovate the economic structure, improve institutions, business environments and facilitate for EU investors in Vietnam.

Improving competitiveness

With high standards in many fields of business, trade, investment, bidding and intellectual property, EVFTA and EVIPA are considered as key drivers for Vietnam to reform and improve the investment environment; transform the economic structure towards modernity, efficiency; overcome challenges in the period when world production is facing the dramatic transformation of the fourth industrial revolution.

Therefore, the deployment of EVFTA and EVIPA is also expected to be a key driver behind the second wave of reforms in Vietnam. However, the preparation from the Vietnamese side on the investment environment, human resources, technical infrastructure and technology absorption, plays an important role in promoting opportunities from the two agreements. According to experts, in order to take advantage of the opportunity, first of all, authorities should increase the dissemination about the agreements.

Immediately after the agreement was signed, the Vietnam Chamber of Commerce and Industry (VCCI) coordinated with the EuroCham to organise a workshop on EVFTA. The business community hopes to have more cooperation models between businesses of the two economies so that EVFTA really becomes the best agreement. According to Nicolas Audier, Chairman of EuroCham in Vietnam, in addition to economic benefits, EU enterprises believe that these two agreements will positively affect social and environmental issues. Because EVIPA will help enhance the attraction of FDI from the EU more conveniently, make Vietnam become one of hubs for trade and investment activities of the EU in Southeast Asia.

In order to welcome investment waves from the EU, Dr. Phan Huu Thang, former director of the Foreign Investment Agency under the Ministry of Planning and Investment), said that only when there is a more competitive investment environment, more outstanding than other countries in the region, Vietnam will gain an advantage in attracting international investment competition. Therefore, Vietnam needs to make efforts to overcome the current limitations of the investment environment, continuing to improve the legal and policy system to have a more competitive investment environment. In particular, it is necessary to ensure consistency, easy to understand the legal spirit of all contents related to investment and business. In addition, it is necessary to provide a list of projects to attract suitable investment, and promptly prepare infrastructure, electricity, water, human resources, industrial park workshops to welcome EU enterprises.


Up to now, EU investors have 2,244 projects at Vietnam with a total registered capital of US$ 24.67 billion, some other large projects through other territories are not included. Currently, the countries that have invested the most in Vietnam among EU member countries are Netherlands, France, Luxembourg and Germany, including investment projects in advanced technology from Ericsson, ABB corporations, Bosch. Most EU projects are concentrated in areas with developed infrastructure such as Hanoi, Quang Ninh, Ho Chi Minh City and the southern key economic region.

Source: Ministry of Planning and Investment