The country’s economy, which depends much on FDI, has been severely affected by the fall in global investment flows and is yet to recover from it, Sai Gon Giai Phong (Liberated Saigon) newspaper quoted Dr Hoang Xuan Hoa of the Party Central Committee’s Economic Commission as saying.

"Viet Nam should tweak its FDI policies to attract not too much [FDI] but, importantly, into the right sectors," he said.

The country’s FDI policies are classified into three groups, namely general, expansion by existing foreign investors, and encouraging tie-ups between foreign and local firms.

In the 25 years since it adopted economic renovation, Viet Nam has amended its FDI policies several times to fall in line with international laws and ensure National Treatment (NT) and Most Favoured Nation (MFN) treatment.

In 2005 the National Assembly approved the Investment Law and Enterprise Law, which have promoted FDI.

Hoa said policymakers should upgrade FDI policies related to some key sectors, industries, and partners, especially for high-tech projects.

Policies encouraging links between foreign corporations and local partners should get more attention, he said.

"The Government should draft regulations related to industries in which joint venture between local and foreign companies are encouraged."

End to monopoly

To attract FDI, the legal system has to be reviewed and updated, especially on mergers related to foreign players and incentives should be offered for urban development and building infrastructure like water supply and sewerage, social housing for low-income persons, and public facilities like schools, healthcare centres, and housing for workers in industrial and processing zones.

"Taxation and incentive policies must be different for various special industries and private investors must be allowed monopoly industries like power distribution, water supply, and ports," he said.

Outdated technologies and polluting projects should not be licensed and land allotment must be reviewed, he said.

Hoa also suggested that the Government must adopt policies to open up the country sooner than pledged under World Trade Organisation commitments in certain key fields like healthcare, education, telecom, marine transport, and aviation.

"Exclusive policies aimed at attracting multinational corporations, especially those in the top 500 and firms from EU, the US, and Japan, must be considered along with speeding up negotiations for bilateral investment agreements with major partners."

Policies must be flexible to enable all localities to attract FDI and the Government must create a periodic national investment list to seek FDI.

He stressed that master plans play a very important role in attracting FDI by reducing the time taken to grant licences, managing foreign-invested projects, and improving co-ordination in enforcing investment laws.

Simplifying administrative procedures for foreign investment, training for human resources, announcing a development master plan for until 2020, and unclogging land acquisition and clearance processes would help boost FDI, he assured.