The current regulations cause difficulties for foreign investors trying to obtain investment
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State management authorities want more clout to supervise foreign-invested enterprises.
They made the request during a recent meeting between the Ministry of Planning and Investment (MPI) and local authorities on the management of foreign direct investment (FDI).
All attendees said the existing legal framework was all about supervising the licensing of new projects, but failed to spell out measures to manage the operations of firms that were already up and running.
According to the Investment Law, foreign investors must complete a checklist of administrative procedures, including providing details on environment protection and handing over detailed investment plans before obtaining investment certificates. In many provinces, investors also have to come up with evidence of their financial ability and even deposit money towards their projects.
“The current regulations cause difficulties for foreign investors trying to obtain investment certificates. But once investors overcome this step, state authorities fail to manage them,” said Do Nhat Hoang, director of MPI’s Foreign Investment Agency.
Hoang said this failure would negatively impact on the quality of FDI in Vietnam. He said cases of environment pollution and construction delays at FDI projects were the consequence of slack management.
Taiwanese seasoning producer Vedan Enterprise Corp is one example. The firm illegally discharged wastewater directly into Thi Vai River in Dong Nai province for a long period before being detected in 2008. And the recent disappearance of US-backed Good Choice Limited Company, the developer of the long-delayed $1.3 billion Wonderful Theme Park project in Ba Ria-Vung Tau province, has raised alarms about the failure of provincial authorities in supervising foreign investors.
Nguyen Van Tu, deputy director of Hanoi’s Department of Planning and Investment, said the existing Investment Law did not grant state authorities enough power to closely supervise the operation of investors in the country.
A year ago, Prime Minister Nguyen Tan Dung signed Decision 77/2010/QD-TTg forcing foreign-invested enterprises to report gross revenue, production, legal capital, sources of disbursed capital, recruited labour, manufacturing technology and tax every month to local statistics offices. However, many firms had flouted this regulation.
“Just a few enterprises have reported during the past year. But even for those enterprises that report, we don’t know whether their reports are true,” said Hoang.
The lack of detailed reports on business operations and FDI attraction had been a roadblock for the government’s efforts to issue correct policies for foreign enterprises in Vietnam, he added.