A workshop on new approaches to attracting more overseas investment to Vietnam took place at the Vietnam National University in Hanoi on October 31. The event was organised by the Vietnam National University of Economics and Business in collaboration with the Party Central Committee's Economic Commission.

Associate Prof. Nguyen Hong Son, Deputy Chairman of the Central Committee's Economic Commission said that in the five years since implementing Resolution No.39-NQ/TW and Resolution No.50-NQ/TW, FDI into Vietnam has increased, creating a lot of value ​​for the economy and acting as an incentive to modernise.

"Foreign-invested enterprises (FIEs) have become an important part of the economy, actively contributing to the country's socioeconomic development," Son said.

Particularly, although 2023 was a challenging year for the Vietnamese economy, registered foreign investment in Vietnam increased sharply to $36.6 billion, up 32 per cent on year, while global FDI capital rose by only 3 per cent. FDI disbursed was over $23 billion, accounting for 16 per cent of the total investment as a whole.

According to the Ministry of Planning and Investment, in 2023, FIEs contributed $18.3 billion to the state budget, making up about 25.4 per cent of total budget revenue and earned close to $260 billion from export value, equivalent to 73 per cent of total country's export turnover. This sector creates more than 360,000 jobs annually on average.

In the first nine months of this year, total registered funding from abroad reached almost $24.8 billion, up 11.5 per cent on-year; while its disbursement was about $17.3 billion, up 9 per cent on-year.

"Vietnam can expect to draw in about $39-40 billion in foreign investment in 2024, reflecting the resilience and attractiveness of Vietnam as an investment destination and trade partner," said Son.

Prof. Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE) agreed that 2024 could be a successful year in attracting investment.

"In addition to the target of luring about $39-40 billion of FDI, Vietnam can achieve a record disbursement of $25 billion as the target set in Resolution No.50-NQ/TW of the Politburo. Vietnam has been successful in attracting investment thanks to the improvement in the business environment and related institutions, a stable political scene, and high economic growth potential," he said.

Mai went on to express some concerns about the negative impacts of FIEs.

Huong Vu, CEO of Ernst & Young Vietnam, said, "The transfer pricing situation in FIEs is still the most concerning issue."

Vu pointed out some typical violations of transfer pricing regulations such as losses reported by businesses while still expanding operations; losses reported just as tax incentives end; affiliated companies selling assets to subsidiaries at prices higher than the market to raise profits abroad and increase depreciation costs in Vietnam; and paying service fees.

Source: Vietnam Investment Review