At a dialogue between Prime Minister Pham Minh Chinh and the EU business community on March 3, Deputy Minister of Finance Nguyen Thi Bich Ngoc said the ministry was working with local authorities to expedite investment certification issuance and adjust tax policies to better align with the needs of businesses.

Ngoc made the statement in response to customs and tax policy proposals raised by investors, including Hung Yen Textile & Dyeing Co., Ltd. and HEINEKEN Vietnam.

The latter called for regulations to support wastewater reuse and circularity, including enabling cans to be recycled for the same application.

As Vietnam continues to assert its position as a global investment hub, enhancing trade facilitation has become critical. Claudia Anselmi, CEO of Hung Yen Textile & Dyeing, emphasised the need to clarify policies to support on-the-spot import-export. She also pointed out the issues in the current VAT refund system, which increases costs and impacts business competitiveness.

“Addressing these issues will help ensure that Vietnam remains an attractive destination for high-value manufacturing investments,” she said.

Review and reform

Together with tax policy, energy, healthcare and technology were among the big issues which foreign-invested enterprises (FIEs) are looking for further advancements.

Deputy Minister of Science and Technology Bui Hoang Phuong said, “Vietnam will prioritise development of AI, semiconductor tech, and cloud computing. The government will offer personal income tax exemptions and a five-year visa extension to engage high-tech professionals.”

He elaborated that the development direction for the aforementioned priority areas is stipulated in the draft Digital Technology Industry Law and the Science and Technology and Innovation Law, which are expected to be presented by the Ministry of Science and Technology to the National Assembly in May this year.

The draft Science and Technology and Innovation Law is scheduled for review and feedback at a National Assembly session in mid-2025, and is expected to be passed at the next session at the year’s end. The Digital Technology Industry Law is expected to be passed in May.

In the healthcare sector, Minister of Health Dao Hong Lan confirmed that the new Pharma Law, effective from July 1, will shorten the drug and vaccine approval process from five years to just eight months.

“The government is also actively working on drafting relevant decrees and circulars, and the minister encourages businesses to actively collaborate closely with the Ministry of Health,” she said, emphasising the need to harmonise standards with European regulations to accelerate the approval process for medical products.

Deputy Minister of Industry and Trade Nguyen Hoang Long responded positively to the business recommendations regarding stable access to green power.

“The government plans to issue new decrees aimed at developing between 80,000 and 100,000MW of renewable energy, while also promoting the self-produced, self-consumed electricity model to optimise clean energy capacity,” he said.

These commitments are expected to be driving forces for the EU business community and FIEs amid new challenges that are going to come from US trade tariffs. This has raised fresh concerns about a global trade war, which could increase difficulties for struggling economies.

As shown in a survey conducted in February by the American Chamber of Commerce (AmCham) in Vietnam, close to four-fifths of US companies operating in Vietnam are concerned about the possibility of the US imposing tariffs on imports from the Southeast Asian nation.

And more than 85 per cent fear the proposed US tariffs will reduce trade volume, disrupt business relationships and affect the Vietnamese economy.

“If the US imposes tariffs on products originating from Vietnam, the consequences will not only be limited to domestic enterprises but will also have strong impacts on FIEs. For example, a multinational corporation may have a component manufacturing factory in Vietnam, assemble it in Europe or Japan, and then export it to the US. When the US adjusts tariffs on a link in this chain, businesses will have to re-evaluate their production strategies, posing a problem for Vietnam in retaining investment,” said Le Net, lawyer at LNT & Partners.

Legal refinements

Some experts said that facing external tariff pressure, legal reform will continue to be an important tool for a country to retain its attractiveness and competitiveness. The Vietnamese government has made significant strides in improving the business climate. However, further refinements are being sought to create a more favourable business climate for the business community.

The Vietnam Chamber of Commerce and Industry vice president Nguyen Quang Vinh told VIR, “Policy stability is key, as large investors need a low-risk and predictable business environment. Countries in the region such as Indonesia, Malaysia, and the Philippines are actively improving the investment environment to engage foreign investment inflows. With increasingly fierce competition from these countries, Vietnam faces the risk of foreign investment capital shifting if it does not have appropriate policies.”

Vinh suggested that enhancing the legal environment was required, via ensuring consistency and transparency in policy issuance and implementation, and creating trust for businesses to make long-term investment. “Vietnam needs to continuously improve its investment environment and have a flexible foreign investment attraction strategy to maintain its position in the region,” Vinh further addded.

European Union Ambassador to Vietnam Julien Guerrier highlighted the need for clear and predictable regulations, uniform application of the law across all levels of administration and provinces and alignment with international standards. This will help Vietnam to unlock the full potential of EU-Vietnam trade and investment cooperation.

He reaffirmed Europe’s readiness to bring more investment, tech, and opportunities to Vietnam. EU-Vietnam trade has already reached €68 billion in 2024, with the EU-Vietnam Free Trade Agreement. Further progress means securing an inviting environment for investors in Vietnam with clear and predictable rules, consistent application including across provinces, and faster decision-making,” Guerrier said.

According to the Foreign Investment Agency under the Ministry of Finance, Vietnam enjoys big growth in foreign direct investment in the first two months of this year. Specifically, 516 new investment projects were registered, totaling more than $2.19 billion. This represented a 10 per cent increase in the number of projects, but a 48.4 per cent decrease in registered capital.

On the other hand, 256 ongoing projects received additional investment capital of $4.18 billion, marking a 42.2 per cent rise in project numbers and nearly a 7.4-fold increase in capital.

Source: Vietnam Investment Review