Wed. Feb 28th, 2024

VietNamNet Bridge – Vietnam believes that it’s now the right time to shift
from the pre-licensing to post-licensing inspection over foreign invested
projects to improve the foreign direct investment (FDI) quality.

Vietnam, FDI, decentralization mechanism, foreign investors, capital

The draft of the government resolution on improving the effectiveness in
attracting, using and managing FDI, shows a lot of measures to tighten the
control over the FDI project implementation after the licensing. The draft
resolution says that local authorities and watchdog agencies need to keep a
close watch over the implementation of the projects to timely help investors
settle their arising problems.

There’s a noteworthy point in the draft resolution that competent agencies will
have the right to stop the investments and revoke investment licenses of the
projects which do not fit the development strategies of the industries or the
localities, or the projects whose investors are too slow in the implementation.

Phan Huu Thang, Director of the Foreign Investment Research Center, an arm of
the Hanoi Economics University, while applauding the viewpoint, said that it’s a
necessary work, which allows to ensure the committed disbursement speed and help
settle arising problems timely.

Dr. Nguyen Mai told Dau tu newspaper that it’s now the right time for Vietnam to
shift from the pre-licensing to post-licensing control mechanism. If Vietnam
does not follow that way, it would never be able to improve the quality of the
foreign investment.

Analysts also commented that over the last 25 years, since the day Vietnam
opened its doors to FDI, it has been concentrating on considering the registered
projects thoroughly before licensing. Meanwhile, local authorities have not been
paying much attention to the implementation of the projects. This explains why
they don’t have updated information about the disbursement rate or the
difficulties of the investors.

In many cases, foreign investors escaped Vietnam, leaving big unpaid debts.
However, the competent agencies had no information about the enterprises until
the day the investors left Vietnam. Especially, they knew nothing about the bad
business performance of the enterprises which occurred many years before the day
the investors escaped.

Over the last 25 years, FDI has been bringing to Vietnam not only capital and
technology, but also bringing environment pollution and tricks, such as the
transfer pricing. This has been blamed on the Vietnam’s unreasonable FDI
management mechanism: it has been gathering on the pre-licensing control, while
making light of post-licensing management, while the latter is the most
important work.

“If we had kept tight control in the post-licensing period, the Vedan case would
have occurred,” said Mai.

Vedan, a seasoning powder manufacturer, was found as causing the serious
environment pollution when discharging its waste water directly to the
environment without any treatment.

The problem, according to Mai, was that the competent agencies only considered
the report on the possible impacts on the environment submitted by the
investors, while they did not keep a close watch over the implementation of the
project after the licensing.

“Let the investors build their factories and put them into operation. We will
supervise their operation to be sure that they don’t break the commitments. If
they do, we will ask them to halt operation or shut down,” Mai said.

“Investors would not dare to make violations to see their factories shut down,
because by that time, they will have spent big money on the projects already,”
he continued.

Tran Thuy

By vivian