A photograph in Wednesday’s edition of the BusinessMirror makes clear the economic realities of the 21st century.
The picture shows the Swiss Foreign Minister meeting with the Vietnamese Deputy Prime Minister in Hanoi to discuss bilateral relations, trade and investment. The irony is that this meeting is taking place under a prominent picture of Ho Chi Minh.
“Uncle Ho” may have been the leader of Vietnam’s long struggle for independence, but, economically, he was a hard-line communist, who modeled his nation’s policies after those of Joseph Stalin’s.
The story under the photograph might be causing Ho to spin in his grave as Vietnam is about to open the country further to foreign investment.
Vietnam’s transition to a more open and free economic state began in 1986, almost 20 years after, Ho died. It began with ‘Doi Moi’. This policy maintained strict central government economic planning, but allowed for small businesses to open and grow. In 1996 Vietnam implemented what, at that time, was one of the most progressive and open foreign investment laws in the region, if not the world.
Export zones were set up, profits were allowed to be repatriated, and build-operate-transfer schemes were implemented. Virtually every sector of the economy, from agriculture to infrastructure, became available to foreign investment. Foreigners were allowed 100-percent ownership of their companies. But, as good as that all sounds, there were some restrictions on foreign direct investment (FDI). Vietnam is now moving ahead to open its economy even more.
In 2014 Vietnam attracted net $9 billion in FDI; the Philippines brought in $6 billion. But pledged FDI in Vietnam fell 22 percent in the five months of the year. The Philippines saw a drop of 40 percent in the first quarter.
Vietnam’s Planning and Investment Minister Bui Quang Vinh said his country intends to bring in $12 billion in 2015 by significant changes in Vietnam’s foreign investment regulations.
On July 1 the government will reduce to six from 51 the number of areas in which foreign firms are prohibited from operating. It will also loosen regulations in more than 100 other areas in what will be the biggest overhaul of foreign business rules in the economy, since private firms were allowed in Vietnam in 1990.
Vinh said the revised laws on investment and enterprises “will make huge changes to significantly improve our business environment and create strong momentum for growth.” Vinh expects FDI pledges of $23 billion in 2015.
But, in the Philippines, we get this kind of comment from a prominent leader: “What do we, as a nation, stand to gain from relaxing the [foreign investment] provisions now deemed restrictive?”
The following facts might answer that question. The annual economic growth rate in Vietnam averaged 6.48 percent from 2000. The Philippines’s average was 5.08 percent. In the first quarter of 2015, Philippine growth was 5.2 percent; in Vietnam, it was 6.03 percent.
FDi is not a “magic bullet” for the economy. But it is a critical factor, and that factor is missing in our country.
source: Business Mirror
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