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Vietnam attempts to tighten control over FDI projects
It sometimes happens that foreign investors register investment projects in Vietnam and then. . . run away. But this will not happen any more in the future, since the Ministry of Planning and Investment (MPI) is planning to tighten the control over FDI projects by amending an important legal document.
Pham Manh Dung, Director of the MPI’s Legal Department said that the currently applied FDI (Foreign direct investment) management method shows a lot of shortcomings and needs to be amended. A lot of foreign investors register their investment projects, but while the volume of registered capital is big, only a few projects run effectively.
Dung said MPI has submitted to the Government the draft decree guiding the implementation of the 2005 Investment Law which, if approved, will replace the currently valid Decree 108 promulgated in 2006.
“The draft decree will only make some changes in comparison with the decree 108. However, the issues it mentions are really “sensitive”.
Whom to allocate golden land?
In many cases, though FDI projects have small investment scale, but investors still can be allocated large land plots, which is really a big waste. “The regulations need to be amended so as to allow us to use land in the most effective way,” Dung said.
He went on to say that management agencies have been urged to be choosier in licensing FDI projects. Since there is no regulation about the required minimum investment capital, many tiny investment projects have been registered, including the projects capitalized at $10,000 only, or less than 200 million dong.
Le Viet Dung, Deputy Director of the Binh Duong province’s Department of Planning and Investment, said it is necessary to “use the hands” of the Ministries of Construction, and Industry and Trade to “filter” tiny projects. Besides, management agencies can also install “technical barriers” to select projects. For example, the projects that may pollute the environment and the projects that may use too many labourers will not be licensed.
Besides, according to Nguyen Mai, Chair of the foreign invested enterprises’ association, Vietnam should require foreign investors to use modern and green technologies or the technologies that allow to save energy and deal with the climate changes. He has warned that if Vietnam continues accepting more metallurgy projects, the country will not be able to provide enough electricity to the projects.
How to inspect investors’ financial capability?
Under the current regulations, Vietnamese management agencies do not examine investors’ financial capability, while foreign investors prove their financial capability themselves. As the result, a lot of foreign investors still registered their investment capital, even though they did not have money.
Dung from MPI stressed that FDI projects mean the projects run with foreign sourced money, not the projects whose investors are foreignwith domestic capital. In many cases, foreign investors do not bring foreign money to Vietnam to run registered projects, but they try to seek capital right in Vietnam after they obtain investment licenses.
In order to deal with the problem, some provinces require foreign investors to pay the security/caution money, worth five percent of the total investment capital, for the right to keep the land. If the investors do not implement projects as scheduled, they lose the (Security) money.
vietnamnet, Dau tu
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