A post WTO deluge in FDI is forecasted

Economists have predicted that at least $20 billion in foreign direct investment will flow into Vietnam this year as the country opens its market after its World Trade Organization accession.

At the Vietnam Trade and Investment Forum in Hanoi last week, one year after Vietnam entered the global trade body, investors and economists said foreign direct investment (FDI) had jumped and would continue to rise.

Gannon Vietnam managing director Walter Blocker, who is also vice chairman of the Asia-Pacific Council of American Chambers of Commerce, predicted that Vietnam would continue to attract more than $20 billion in FDI in 2008 after the country opens more sectors per WTO commitments.

“WTO accession had spurred confidence for investment in Vietnam because the country had committed to adhere to an international system,” he said.

Vietnam has been serious about implementing commitments by improving the regulatory climate to make its laws conform more to international practices and to WTO regulations. The country has revised about 30 laws and ordinances.

“The government has proven its constructive economic course in the past. We are convinced that this course will be continued and build a strong foundation for future investment and success,” said Metro Group vice president Henry O.E. Birr.

Last year, Vietnam recorded $20.3 billion in FDI, a 69.1 per cent increase against 2006.

Ashok Sud, European Chamber of Commerce executive committee member, said it was an astounding figure that had far exceeded domestic and foreign commentators’ expectations.

Deputy Prime Minister Pham Gia Khiem said WTO accession created more of a driving force for Vietnam to reform its internal legislative system to come more in line with international practices, creating a favourable and equal business environment for all economic sectors.

Before WTO accession, there was much anxiety and doubt about the Vietnam economy’s adaptability to the tremendous changes in the business environment as well as about its ability to deal with international integration. Khiem said that outside partners had not really believed in Vietnam’s determination to fully and seriously implement its integration commitments.

“Our great achievements in economic development over the past year have wiped out all those concerns and doubts,” he said.

However, World Bank lead economist in Vietnam Martin Rama said that the country had to improve its investment environment, particularly in tackling piracy, copyright infringement and trademark violations. It also needs to strengthen public investment processes and allow the private sector to take part in infrastructure investment, he said.

“Longer-term planning is needed for social infrastructure, such as in education, vocational training and health systems since Vietnam will continue to attract labour intensive industries. But it will also begin to attract the higher-quality investment requiring a higher quality workforce with higher wages,” said Blocker. (Dau Tu Newspaper)