However, as the flow of Vietnam’s overseas investment grows, several issues have emerged, causing several of Vietnam’s foreign investment projects to encounter barriers and record less-than-expected results.
Data by the Foreign Investment Agency showed that Vietnam’s total foreign investment reached US$439.02 million in the first eight months of 2019, with US$339.49 million pledged to 102 new projects and US$99.53 million added to existing projects.
Since 1989, Vietnam has invested over US$22 billion abroad in agriculture, forestry, energy and telecommunications, which are the strengths of Vietnamese enterprises. Capital is mainly concentrated in Laos, Cambodia and Myanmar.
According to the Vietnam Chamber of Commerce and Industry, the rise of Vietnam’s overseas investment in recent years is attributed to the standardisation of investment procedures and the fine-tuning of the legal system, which facilitates Vietnamese enterprises in foreign investment and strengthens management over the projects outside Vietnam.
Many corporations and groups have invested more than US$1 billion abroad, such as PVN, Viettel and Hoang Anh-Gia Lai.
However, there are many potential risks and challenges facing the operations of these companies. One of which is the difference in the culture, law and business environment, which is the primary cause leading to unexpected disputes, affecting the implementation of the projects, the rights and interests of local residents as well as the image of Vietnamese investors.
In addition, many Vietnamese companies, which invest in overseas business, are operating in a spontaneous manner. When disputes arise, the handling is very difficult and complicated with many problems spinning out of control.
Therefore, in order for Vietnamese foreign investment to be more effective and minimise the risks, Vietnamese enterprises, first and foremost, need to proactively study and keep themselves updated about policy changes, and to cooperate with the local governments and residents of the countries where they are doing business on a win-win basis.
It is necessary to comply with local laws, international laws and related regulations in order to avoid possible disputes during the entire investment process.
On the other hand, the government needs to build and supplement more substantive and attractive policies to encourage enterprises to increase overseas investment as well as to strengthen supervision over the quality of investment flows so as to prevent negative impacts. At the time, instruments are needed to guide enterprises in dealing with difficulties, challenges and risks in their foreign investment activities.
