Attract investment capital from Australia

The most troublesome administrative procedures for Australian FDI enterprises in 2018-2020. Source: VCCI

On December 22, the Vietnam Chamber of Commerce and Industry (VCCI) in collaboration with the Australia-Vietnam Human Resource Development Program (Aus4Skills) held a seminar on “Strengthening Australia’s direct investment in Vietnam amid the CPTPP and RCEP integration” in Hanoi.

According to data from the Foreign Investment Agency, Ministry of Planning and Investment, to November 2021, Australia had 545 investment projects in Vietnam with a total capital of US$1.94 million. Currently, Australia's foreign direct investment (FDI) accounts for only 0.5% of the total FDI value in Vietnam and ranks 19th in the list of economies with the largest FDI in our country.

Despite modest value, Australia’s direct investment in Vietnam is forecast to have many growth opportunities.

According to Nguyen Thi Thu Trang, Director of the WTO Integration Centre under the Vietnam Chamber of Commerce and Industry (VCCI), there are three common FTAs between Vietnam and Australia, including two new generation FTAs, which are the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP).

Trang said that the effects of these three FTAs and Vietnam's 12 other FTAs would open up significant opportunities to attract Australian FDI enterprises to invest and do business in Vietnam.

Simultaneously, Charles Thursby-Pelham, First Secretary of the Australian Embassy in Vietnam, said Vietnam and Australia have just officially announced the Strategy to strengthen Australia - Vietnam economic ties with the goal of making the two countries become each other's top 10 trading partners and double bilateral investment in the near future.

According to the Report "Australian direct investment in Vietnam: Actual efficiency assessment and policy solutions" under the Aus4Skills program, investment environment problems that are hindering the most business activities of Australian FDI enterprises in Vietnam are: troublesome administrative procedures, inadequate tax system, low efficiency of law enforcement, many negatives and unofficial costs, along with limit ations in infrastructure, and high-quality labor source. Businesses in Australia - Vietnam’s potential investors also have similar concerns when considering investing in Vietnam.

To solve the above problems, Dr. Uwe Kaufmann, senior lecturer at the Australian Business Institute said that Vietnam needed to comprehensively reform the public sector, regularly review domestic laws and regulations, and fully implement international commitments on investment, creating a fair and transparent business environment for foreign investors including Australian investors.

According to Nguyen Anh Duong, Head of General Research Department, Central Institute for Economic Management (CIEM), Vietnam should learn from international experiences on policies to attract and promote foreign investment. Amid the pandemic, Vietnam can strengthen investment attraction in the fields of health and digital technology, accelerate digital transformation in investment promotion, and study an open approach suitable to foreign investors.

He emphasized that Vietnam needed to prepare a good foundation to welcome opportunities from the FTAs, especially the RCEP, which would take effect from January 2022. Vietnam also needs to create a "new space" for economic activities, an "open" mindset for trade in services, especially connected services in the value chain.

Additionally, experts and businesses at the conference also proposed to strengthen the connection between businesses, especially in the field of agriculture. Many production models of Australian FDI enterprises have become models for domestic enterprises to learn from.