Vũ Việt Văn, vice chairman of Vĩnh Phúc’s People’s Committee, speaks to Thời báo Kinh tế Việt Nam (Việt Nam Economic Times) on some key points that Việt Nam should change to attract more foreign investors

Vĩnh Phúc is one of several provinces to have attracted a large amount of foreign direct investment (FDI) in Việt Nam. In your opinion, what are the key factors to attract foreign investors?

By late June 2018, 298 FDI had registered in Vĩnh Phúc Province with total registered capital of US$4.13 billion. The FDI came from 16 countries and territories.

The key factor that makes Vĩnh Phúc a target for FDI investors is its lucrative investment policies.

In a recent report, Vĩnh Phúc authorities have complained that some FDI enterprises are slowing production. What’s your response to the report?

Early this year, Việt Nam declared that it had mapped out a plan to abolish import-export tariffs for auto spare parts. Upon learning the news, many Japanese FDI automobile manufacturing enterprises in Vĩnh Phúc decided to slow production and import spare parts from regional countries, including Indonesia. As a result, Vĩnh Phúc’s budget was immediately affected.

In order to balance the province’s revenue, Vĩnh Phúc has launched campaigns to call on more foreign investors. However, provincial authorities have declared that they will not attract foreign investors at all costs. For example, more recently, the province has turned down an investment request from a foreign investor in the field of textiles after studying the investment proposal. We found out that in the plan, water supply and wastewater treatment had failed to meet our standards and could have caused environmental problems to the people, not only those living in Vĩnh Phúc, but also people living in neighbouring provinces.

If Japanese automakers decide to increase their spare parts imports from other regional countries, we’ll have to consider it at a macro level. However, we will continue to consider the production of auto cars, motorcycles and electronic spare parts as our spearhead industry. The province will focus efforts on the development of supporting enterprises for major FDI enterprises in those areas.

Can you tell us about the links between local enterprises and FDI enterprises in Vĩnh Phúc Province?

I should say that these links should be on a voluntary basis of all parties involved to meet their demands and interests.

The province will only act as middlemen to link Vietnamese supporting enterprises with FDI enterprises to create a production chain.

What is Vĩnh Phúc’s plan to attract more FDI investment?

To my understanding, the Government has a plan to switch the current policy of passive investment promotion to active investment promotion. That means Vĩnh Phúc will proactively approach potential investors in order to know what their demands/requirements are and what the province can offer. I’m sure if the output is bigger than the input, investors will come. However, it is very important for Vĩnh Phúc authorities to calculate carefully investment effectiveness – the correlation between the benefits the province and investors will gain.

Does that mean Vĩnh Phúc Province will reconsider its previous lucrative investment policy that it has offered to foreign investors?

Lessons learned from the past few years show that our lucrative investment policies are not the main reasons for foreign investors to invest in Việt Nam.

We have offered tax incentives in less developed regions and in certain fields like agriculture and fisheries, but foreign investors have not expressed an interest in these offers. Our complicated and even cumbersome tax policies have also made our investment offers less attractive.

In my opinion, to attract more foreign investors to our country, besides lucrative investment policies, we also need to have an open and transparent investment environment. Coupled with these policies we need to speed up administrative reform to cut through the red tape. — VNS