The Institute of International Investment Studies Co., Ltd (ISC) last week launched the research results on criteria for appraising foreign-invested projects and assessing their quality and effectiveness after over six months of work. The research was financed by the Australian Department of Foreign Affairs and Trade to support localities.

The criteria for appraisal of foreign-invested projects to approve licences combines 10 appraisal criteria, including eight project screening criteria and two to consider incentives. They will offer requirements relating to the profile and legal status of investors, national defence and security, environmental protection, and financial capacity of investors, among others.

Meanwhile, the criteria for monitoring and evaluating the quality and effectiveness of foreign-invested projects in localities combine 36 criteria, divided into seven groups, including economic efficiency, social efficiency, environmental protection, technology, and management, among others.

According to the research team, there is now a lack of mechanisms to select foreign-invested projects for industrial zones. Those that apply for issuance of registration certificates are not subject to appraisal or approval of investment policies. As a result, the system can overlook projects with outdated technology or which create a negative impact on the environment.

This is especially so in the context that many localities have not yet issued regulations on land use efficiency and labour use efficiency as a basis for project selection.

The research team also shows that the assignment of tasks to provincial authorities in statistics and management of investment implementation of foreign-invested projects is not clear, and most localities do not know the exact capital made in the area by project as well as by industry or field. The handling of cases where projects are implemented behind schedule remains confusing.

These criteria are expected to remove the bottleneck for foreign-invested enterprises, even those with long-term investment in Vietnam. In one example, Fujita Co., Ltd. is a Japanese construction company with established branches in Hanoi and Ho Chi Minh City since 1992. In addition to construction work, Fujita also engages in real estate, and is currently conducting a large-scale development project called WFC in the northern port city of Haiphong.

“During our project, we were proceeding with the concept of delivering Japanese quality to Vietnam. However, there were many differences in laws and also ways of thinking about buildings, so we had to consult relevant authorities one by one as we proceeded with our project,” said Ueda Takafumi, general director of Fujita Vietnam.

“Not only were we required to have various approvals, but the procedures leading to approval were also unclear, and there was no detailed request or guidance from the relevant authorities. There were some parts which we were able to complete on our own, but for certain procedures, we had to hire consultants like other foreign companies,” Takafumi said. “We believe that the results of this study will be very useful for companies considering approval of projects. If this type of research is continued in the future, Vietnam will become even more attractive as an investment destination.”

The company started its development plan in 2018 and invested in a hotel and serviced apartment, which opened in 2020. It currently has plans to build another condominium project this year.

Cosimo Thawley, Minister Counsellor and representative of the Australian Treasury, said that having criteria to support foreign investment attraction is vital.

“In Australia, we apply criteria that ensures that all the risks are accounted for and managed. This includes national security, competition, economic and community impact, taxation, and other government policies such as environmental policies. These criteria allow us to have a rigorous framework, but one that is flexible enough to account for a range of different sectors or investment proposals,” he said.

Applying criteria cannot diminish competition and cannot lead to a detrimental impact on taxation, Thawley added. “That doesn’t necessarily mean we will reject the foreign investment proposal. It may just mean that we impose conditions on the investment such that they address that risk,” he said.

Source: Vietnam Investment Review