The lure of Vietnam
Very often investors have been warned of many a pitfall and hurdle. Critics have cautioned that Vietnam is not an Eden for capitalists, citing how labyrinthine the bureaucracy is, and opaque its legal system. Corruption, they say, is a big problem and taxes too high and subjectively applied. Maybe they are ‘health warnings’, yet despite all the dissuasion, competition has been increasingly fierce on the investment front.
As recent developments have shown, Vietnam is an economy in transition. Canon and Intel, for instance, are investing heavily in facilities in Vietnam, an “up and coming” IT destination. Of course, corruption and non-transparency of the bureaucracy remain problematic, Prime Minister Nguyen Tang Dung has been
listening and made it a top priority to resolve the issue. The year 2007 has been made a key year for reforming public administration, including reducing the implications of red-tape for foreign business interests.
Over time, the Enterprise Law and Investment Law (2005) should help improve business conditions as it is expected of a WTO member. A law on the securities market, that came into force in January 2007 provides the legal basis for investor protection and market transparency, including disclosure requirements for publicly held companies. Maximum foreign ownership limits in listed companies have been lifted from 30 percent to 49 percent.
Thanks to WTO membership, Vietnam’s tariff structure is undergoing significant changes, with average tariffs declining from a current rate of 17.4 percent to an average final bound rate of 13.4 percent. Most tariff cuts are scheduled to take place over the next five years. Besides, the WTO accession has opened greater opportunities for exporters and manufacturers as the country becomes eligible for most-favoured-nation treatment and it is no longer subject to quotas. Irresistible it is for investors in the Asean region and beyond.