Ready to welcome investment flows from Europe
14:46 | 05/06/2020

VGP – The European Union-Viet Nam Investment Protection Agreement (EVIPA) will create a legal framework and improve Viet Nam’s opportunities in attracting investment flows from EU member countries.

Viet Nam ready to welcome investment flows from Europe

As of 2019, the EU has been the fourth largest investment partner of Viet Nam with over 2,240 valid projects totally worth US$24.67 billion, or 7.6% of total FDI inflows into Viet Nam.

So far this year, the form of capital contribution and share purchase at Vietnamese businesses has been on the rise among investors from the United States and Europe rather than being concentrated in the group of investors from Asian countries.

Specifically, in the first four months of 2020, French investors had 78 transactions with a total capital of nearly US$27 million. The United Kingdom conducted 32 transactions through this form of investment with US$38.56 million, an increase of 14 transactions over the same period last year.

Despite their modest number of transactions (15), Dutch firms invested up to US$46 million in capital contribution and share purchase at Vietnamese companies.

Up to now, the EU has invested in 18 out of 21 industries according to the industrial classification system for national economic activities, and is present in 54 cities and provinces across the country.

A number of large EU corporations are operating effectively in Viet Nam such as BP (UK), Shell Group (Netherlands), Total Elf Fina (France, Belgium), Daimler Chrysler (Germany), and Siemen and Alcatel Comvik (Sweden).

Previously, the EU’s investments mainly focused on high-tech sectors, but in recent times, they have seemed to be more concentrated in service industries such as post and telecommunications, finance, office for lease, and retails.

As assessed by economic experts, after the EU-Viet Nam Free Trade Agreement (EVFTA) comes into force, indirect investment will also be poured into the banking sector, because under the deal, credit institutions from the EU have the opportunity to own up to 49% of shares in Vietnamese commercial banks (a maximum of two banks, excluding the four major banks with state ownership).

Therefore, it is likely that through investment funds, there will be more cash flows from foreign financial corporations into bank stocks.

However, according to the Viet Nam Association of Foreign-Invested Enterprises, EU investment in Viet Nam has not yet been commensurate with its potential. None of the EU member states has been ranked among the top 10 investors in Viet Nam, although some EU nations, such as France and Germany, have been making great overseas investments.

Given that fact, the expected implementation of EVIPA will trigger a strong wave of investment from Europe into Viet Nam in the near future.

Standing ready to welcome investment flows

Thus far, the Ministry of Industry and Trade and the Ministry of Planning and Investment have reviewed policies on FDI attraction in order to take specific measures towards promptly issuing policies on screening of FDI capital, promoting the development of supporting industries, and fostering links and forming supply chains between domestic enterprises and FDI firms.

In addition, it is necessary to strengthen the dissemination of the EVIPA’s contents and to-do lists to implement the agreement, especially among the affected subjects, thus promptly grasping requirements and forecast the market demand to apply appropriate solutions.

At the same time, a roadmap should be developed to ensure the effective implementation of the provisions of the deal./.

By Vien Nhu

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