Safe and transparent business investment environment: Attraction to 'accelerate' FDI capital flow

Dr. Nguyen Hoang Le, Ho Chi Minh City University of Economics - Photo: VGP/Minh Thi

With the rapid and complex changes in the world, countries have been forced to adjust their FDI policies. Compared to other countries in the region and continent, foreign investors choose Vietnam because of its advantages of stable political institutions, attractive government policies, abundant labor force, etc.

This has been demonstrated over the past time by the continuous growth of FDI capital flows. As of December 31, 2024, the total registered capital of foreign investment projects in effect is nearly 502.8 billion USD, of which the realized capital is nearly 322.5 billion USD, equivalent to 64.1% of the total registered investment capital.

Notably, in the whole year of 2024, the realized capital of foreign investment projects is estimated to reach about 25.35 billion USD, an increase of 9.4% over the previous year, marking the highest disbursement level ever. The General Statistics Office, Ministry of Finance has also just announced that in the first two months of 2025, the total registered FDI capital in Vietnam reached nearly 6.9 billion USD, an impressive increase of 35.5% over the same period.

This is a good sign, we expect this newly registered capital to be disbursed soon, boosting economic growth in 2025 and the following years.

To create confidence and motivation to attract FDI capital, the Vietnamese Government and relevant ministries and sectors have issued new and revised many related regulations to remove difficulties and support enterprises, including mechanisms and policies for FDI enterprises to operate. Focus on reforming and perfecting institutions, removing barriers in business and investment, creating an open and transparent environment to help improve the investment environment.

However, in reality, the application of regulations and policies in localities, ministries and branches still has some difficulties and shortcomings, not really creating favorable conditions for domestic and foreign investors.

If the competitive environment is not transparent and healthy, it will create opportunities for violations of regulations and policies by enterprises that lack capacity and integrity, thereby hindering the development of investors in general, including FDI investors. In addition, if there is no clear and proper legal corridor in business culture and conduct from state management agencies to enterprises, it will also create bad precedents, hindering the process of creating a healthy investment environment that the Government has been trying to build up to now.

In order to build a professional and stable investment environment, we need to point out the shortcomings and identify the consequences of not completing a safe and stable business environment, so that we can find solutions to remove the shortcomings, in order to build a perfect environment and create a safe and healthy legal framework for investment enterprises.

Many FDI investors and FDI business associations believe that failure to comply with legal and cultural regulations in business also greatly affects the development of each enterprise. That is, if the competitive environment is not transparent and unsafe, it will cause a series of consequences such as: reducing the confidence of investors and consumers; reducing the overall reputation of Vietnamese enterprises in the eyes of international friends; negatively affecting society, hindering the sustainable development of enterprises and the economy and seriously damaging the reputation and image of enterprises...

If the investment environment is not transparent, legal and financial risks increase, making investors hesitant, leading to investment capital flowing to other countries with more stable and secure business environments. Therefore, the issue of transparency of the business environment not only creates a competitive advantage but also helps Vietnam become a notable destination in the eyes of international investors.

Therefore, in order to create a favorable business environment to attract FDI investment, create an equal, safe and transparent "playing field" for domestic enterprises, and motivate enterprises to trust and cooperate with each other, it is necessary to build a healthy competitive environment as well as raise awareness for enterprises (economic entities) about the role and significance of complying with the law, having a professional and transparent business culture.

Making the business environment transparent not only creates a competitive advantage but also helps Vietnam become a notable destination in the eyes of international investors - Photo: VGP/Minh Thi

Transparency in the business environment not only promotes investment but also facilitates linkages and cooperation between domestic enterprises. With information about the market, partners and business opportunities being public and transparent, enterprises can easily search and select suitable partners to conduct business cooperation. Linking and cooperating between enterprises aims to take advantage of each party's strengths, share risks and optimize resources.

In recent times, the Government has issued policies to create and maintain a healthy, fair, equal and transparent competitive environment to promote competition, ensure the right to freedom of competition in business of enterprises according to the provisions of law, thereby creating conditions for society, enterprises and consumers to participate in the process of monitoring the implementation of competition laws.

Thus, when the competitive environment is healthy, it creates attraction for investors. At the same time, it is also a condition for not only FDI enterprises but also enterprises of all sectors to develop production and business.

Some typical examples of cooperation that bring the most benefits to all parties include: The strategic cooperation between De Heus Group (Netherlands) and Hung Nhon Group (Vietnam) has established a chain of DHN high-tech agricultural complexes in the Central Highlands provinces including Lam Dong, Dak Lak, Gia Lai, Tay Ninh and soon the two provinces of Dak Nong and Kon Tum.

Or we can mention the "handshake" between Viettel and Qualcomm to successfully deploy the 5G base station radio block. It is known that Qualcomm and Viettel have cooperated for more than 15 years and gone through many generations of technology from 3G, 4G, to 5G. And then Viettel became one of Qualcomm's first equipment research and production partners in Southeast Asia... This shows that the two sides have complied with the principles of cooperation, respect for the law, and building a culture in business, so they can maintain such long-term cooperation and development.

The cooperation between Nestle Vietnam and the Ministry of Agriculture and Rural Development on the NESCAFÉ Plan sustainable coffee development project has been implemented since 2011, with the goal of sustainably developing the Vietnamese coffee industry, improving the quality and value of Vietnamese coffee beans, aiming to make Vietnam a reference for Robusta coffee in the world and maintaining a sustainable farming environment to cope with climate change.

In the field of education, we can also mention the association between Equest Education Group and KKR Fund (USA), known as one of the largest investment companies in the world, with an investment of 120 million USD to invest in and upgrade the Canadian International School System (CIS) in Ho Chi Minh City and expand the college and university system, especially the campuses of the Broward Vietnam School System in Hanoi, Hue and Ho Chi Minh City....

The NESCAFÉ Plan sustainable coffee development project has contributed to the goal of sustainable development of the Vietnamese coffee industry, improving the quality and value of Vietnamese coffee beans - Photo: VGP/Minh Thi

Regarding investment attraction orientation, Prime Minister Pham Minh Chinh affirmed at the Conference to meet with the FDI business community and the annual Vietnam Business Forum 2024 (VBF 2024): "Vietnam continues to create favorable conditions, build a safe, transparent, and highly competitive investment and business environment so that the business community and investors, including foreign investors, can confidently invest effectively, long-term, and sustainably in Vietnam".

In particular, Vietnam advocates attracting and selectively cooperating in investment, taking quality, efficiency, technology and environmental protection as the main evaluation criteria; committing to creating the best business environment towards OECD standards.

Thus, we can see the Government's strong determination in innovating mechanisms and policies to create a safe and transparent macro environment, creating maximum conditions to attract FDI capital sources in general and creating momentum for the development of Vietnamese enterprises in particular.

To continue to maintain that growth momentum, the Government has been mobilizing and regularly utilizing social resources and international cooperation, contributing to expanding the scope and quality of implementing improvements to the business investment environment to create a healthy space for investors.

To contribute and accompany the Government, enterprises must first strictly comply with legal regulations; respect cooperation agreements between parties to create stability and safety in business and investment. At the same time, they must gradually raise their awareness through proactive coordination with state management agencies to carry out activities to make the investment and business environment transparent.

To do that, the dissemination of knowledge and laws on protecting investors' rights must be promoted, diversified in form, effective in content, widely covering the whole country and having an appropriate approach to the specific characteristics of each specific group of subjects.

Accordingly, to develop strongly and sustainably, it is necessary to "respect the law" with firm, transparent and clear commitments. Because, when parties want to cooperate and associate with each other in the long term, in addition to complying with the law, relying on their trust with their partners, ensuring their commitment to the projects they are implementing, the awareness of complying with fair competition, complying with the law and business culture of enterprises will resonate with the process of creating a safe and transparent investment environment that the Government is striving to perfect.

Together, creating an equal business environment with a fair, transparent legal framework and stable policy operations is the expectation of the foreign investor community and Vietnamese enterprises on the journey of cooperation, association and sustainable development.

Dr. Nguyen Hoang Le

Ho Chi Minh City University of Economics

Source: https://baochinhphu.vn/moi-truong-dau-tu-kinh-doanh-an-toan-minh-bach-suc-hut-de-tang-toc-dong-von-fdi-102250326165256.htm