AmCham has been active in Vietnam since 1994 and our members are committed to helping improve business conditions to promote socio-economic development here.
As readers know, since 2008, Vietnam has faced a number of challenges regarding macroeconomic stability. Unacceptably high inflation, trade deficits, shrinking foreign currency reserves, downgrades by credit rating institutions, negative comments from global financial institutions and a chronically weak local currency highlighted the need for policy-makers to change course. Fifteen months ago, the prime minister announced that the government would focus on stability rather than growth. AmCham and many others strongly supported the government’s effort.
Today, our view is unchanged. Over the years, Vietnam’s success in attracting foreign investment has largely been built on the expectation of economic and political stability. The American business community in Vietnam is hopeful that the government will continue efforts to ensure long-term stability.
Many companies are finding it more difficult to conduct business here now than in past years. Government efforts to “manage” business activity have caused many investors to rethink their business and expansion plans. The government’s recent decisions on which items can be imported, how products can be priced, who can work in Vietnam, which programming can be broadcast on television, who can provide health care, how banks should decide to lend money and much more have contributed to a perception that investors may wish to do business someplace else.
This is harming Vietnam’s chances of developing a stable, high-growth, modern economy that increases opportunities and creates wealth for the 90 million people living here.
Vietnam has gained better access to capital sources, modern technology, and management experience through investment and trade activities with major economies. Trade and its related foreign investment brings jobs and income, tax revenues, exports and foreign exchange, and technology transfer, and contributes to Vietnam’s strategic drive for socio-economic development to industrialise, modernise and globalise. The government can, and should, take actions to reinsert confidence into the economic climate and to ensure that Vietnam remains an attractive and competitive destination for foreign investment.
AmCham members need to see real progress on improving legal certainty, industrial relations, workforce development, protection and enforcement of intellectual property rights and infrastructure to support manufacturing and trade.
The business community also needs to see a more serious effort at streamlining administrative procedures and fighting against the scourge of corruption. In addition, more evidence of the government’s willingness to reform the inefficient state-owned system is needed. It is important that the government also ensures that new laws and rules – such as the draft revised Labour Code and the draft decrees on information technology services and internet content – do not harm Vietnam’s business climate and reputation.
The country needs to make tangible progress on the issues addressed above in order to remain competitive. We want businesses to expand operations in Vietnam, not move them to Indonesia, Bangladesh or Myanmar.
Vietnam’s leadership must recognise that development assistance by itself does not promote economic growth. Rather, it is foreign direct investment and trade that promotes growth. Countries need good economic policies, good legal and regulatory infrastructure, transparent and efficient government agencies, and good public infrastructure - including transport, power and telecommunications, etc - to continue to attract investment, promote trade, and spur economic and social development.
Few investors disagree that Vietnam has huge potential. However, the country is struggling to live up to its full potential, hindered by slow progress on a list of perennial barriers to investment. Concern exists that Vietnam may become stuck in the “middle-income trap,” and may not succeed at the transition from low-skill, low value-added, low-wage manufacturing to higher-skill, higher value-added, higher income manufacturing and services.
AmCham will continue efforts to improve business conditions in Vietnam. Our mission is to support the success of our members by promoting a healthy business environment in Vietnam and by strengthening US-Vietnam commercial ties. This is accomplished through a variety of activities, including legislative and administrative reforms, networking, business briefings, trade missions, informative publications, and much more.
AmCham members have long-term commitments to Vietnam, its economy and its people. We want Vietnam to succeed and we are committed to the principles of free trade, open markets, private enterprise and the unrestricted flow of information. Readers are invited to find out more about AmCham activities by visiting www.amchamhanoi.com or by connecting with us on social media.