Corruption, Red Tape Continue to Hinder Investment in Vietnam: Poll

Tuan Minh

11:21 27/08/2016

BizLIVE - Corruption has been again selected as the top investment obstacle in Vietnam, according to a Grant Thorton survey.

Corruption, Red Tape Continue to Hinder Investment in Vietnam: Poll

Investors remain concerned over corruption in Vietnam. Photo: Internet

“Corruption”, “government red tapes/processes” and “management’s lack of long-term strategies” are continuously selected as the top three critical investment obstacles in Vietnam, with 91% of the respondents, Grant Thorton has said in its latest Private Equity (PE) report.
The weaknesses have negatively influenced Vietnam’s business environment where companies are likely to experience bribery, political interference and facilitation payment, the survey says.
“With the new government and the move to revise the Anti-corruption Law, investors hope for positive transformation in corruption in the near future,” it adds.
The survey points out that the number of respondents on “Constant changes in economic policies” voted for “most critical” has been increased from 15% to 35%.
In order to achieve the aim of improving the legal framework of Vietnam, the Vietnamese government has made a lot of reforms and amendments to many laws. However, such changes could raise concerns about the legal environment among companies and investors.
“If policymakers continue issuing regulating documents without synchronizing the entire legislative system, it could become one of the most critical investment obstacles for Vietnam,” the report warns.
When asked to forecast the level of investment activity in Vietnam, 82% of respondents anticipate an increase. However, this represents a decrease of 4% compared to the last survey.
Source: Grant Thornton Vietnam.
The reasons for the growth in FDI in the country include the establishment of the ASEAN Economic Community (AEC) which has broadened Vietnam’s market, the tendency of FDI moving from China to other Asian countries with Vietnam as one of the top destinations, and the effects of FTAs between Vietnam and major economies.
Besides that, improvement in business environment also has affected the level of FDI in Vietnam.
In terms of investment attractiveness, the trend is quite similar to the last survey. PE investors seeing Vietnam as “attractive” and “more attractive” account for the largest proportion, with 69% selected, an increase of 10 percentage points compared to H2/2015.
With favorable conditions such as abundant labor resources, low operation costs, diverse population structure, and a stable political environment, Vietnam is becoming an attractive investment destination for foreign investors, Grant Thornton says.
It notes that the respondents again put behind Myanmar in terms of investment attractiveness in the region, with 27% of the respondents nominating for Vietnam.
Source: Grant Thornton Vietnam.