Vietnam adds flesh to regulatory bones to court more investment

Reuters

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Workers sew clothing with sewing machines at the Esquel Group garment factory at the Vietnam-Singapore Industrial Park in Thuan An, Binh Duong Province on Tuesday, June 3, 2014. Bloomberg/Brent Lewin Workers sew clothing with sewing machines at the Esquel Group garment factory at the Vietnam-Singapore Industrial Park in Thuan An, Binh Duong Province on Tuesday, June 3, 2014. Bloomberg/Brent Lewin

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Vietnam has issued detailed regulations for foreign investors in 17 business sectors in a drive to improve the investment climate of a fast-growing country blighted by bureaucracy, but now seeing record inflows of foreign capital.
The new list of sectors specifies foreign investment ratios, the scope of investments and compliance with international trade rules and could help reassure businesses hesitant about setting up in the country due to its notorious paperwork, ambiguity and web of regulations and restrictions.
Despite expediting protracted reforms this year, including the opening of dozens of off-limit sectors and easing foreign ownership caps on equities, many potential investors have been waiting for Vietnam to put flesh on the bones of much of its new legislation.
The list includes real estate and providing services in tourism, entertainment, computing, research and development, information, leasing, transportation, construction, healthcare and trading, the Foreign Investment Department said on its website (dautunuocngoai.gov).
Vietnam has seen a record rush of disbursed foreign investment this year, worth an estimated $14.5 billion, up 17.4 percent from the previous year, though pledges have eased slightly to $15.58 billion.
The bulk of that was into a swelling manufacturing sector dominated by textiles, footwear and electronics production for brands such as Samsung, Canon, Nike , Mango and Lacoste, helped by the prospect of tax-free exports under the Trans-Pacific Partnership (TPP) and other trade pacts.
Now clearer are 100 sub-class areas involving providing services, production and trading open or closed to foreign investors. The list did not, however, mention some areas attractive to foreign firms, such as insurance and textiles.
Fields closed to foreigners include lotteries, radio and television broadcasts, operations of flights and key airports and national power transmission and regulation.
Foreign ownership ceilings in other businesses could vary from 49 percent in ship navigation to 65 percent in providing telecoms service without network infrastructure, or 70 percent in leasing vessels and providing healthcare.
A report to the government published this week by the National Financial Supervisory Commission predicted more investment in 2016, including into equities and via mergers and acquisitions. It gave no specific dollar estimates.
The government's think tank projected economic growth to quicken to 6.7-6.8 percent in 2016, from 6.68 percent this year.
Nguyen Mai, president of Vietnam's Association of Foreign Invested Enterprises, anticipated further FDI increases, aided by the clarification of rules.
"The list will help improve the quality of foreign direct investment," he added.

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