Vietnam's efforts to woo foreign investment leave investors in dark HANOI - Vietnam's official newspapers Wednesday hailed the passage of long-awaited new legislation designed to reverse a collapse in foreign investment but the manner in which the law was passed did little to boost investor confidence. Despite communist MPs' approval of the new legislation at a session closed to the foreign press Tuesday, the government is still leaving potential investors in the dark over its much vaunted effort to attract sorely needed new capital. Details of the 20 amendments and two additions to the country's foreign investment law, which are due to go into effect from July 1, will only be published after the law has been ratified by state President Tran Duc Luong. But it is already clear that the amendments eventually approved by MPs fell far short of the ambitious programme originally envisaged by the government to stem the drastic decline in foreign investment approvals from eight billion dollars in 1996 to just 1.5 billion last year. The official press made much of the fact that MPs approved the changes after just two days of committee meetings and debate, a day quicker than scheduled. But even official newspapers conceded that the new legislation was not given a completely smooth passage by the 371 MPs present, many of whom questioned whether the fall in foreign investment was really the fault of too many state controls here. Heated opposition from communist legislators forced the government to accept last-minute amendments to its proposals to grant overseas firms some measure of protection against unforeseen legislative changes, the English-language Vietnam News said. Hanoi MP Ton That Bach and other legislators refused to accept the government's argument that foreign firms needed to see a reasonable return on their investment and expressed concern that foreigners were being given an unfair competitive advantage over Vietnamese businesses, the paper said. Three other government proposals were also rejected by MPs, the Saigon Times Daily reported. It was by no means the first setback to the government's plans to woo overseas investors back to a communist country which remains wary of allowing foreigners too much control over its economy. At a last-minute meeting before the opening of the new parliamentary session last week, the government was forced to postpone plans to allow foreign investment in the new stock market it plans to open in July, the economic weekly Vietnam Investment Review reported. Legislators had expressed concern that the proposal to allow the flotation of joint stock companies with foreign invested capital would lead to foreign domination of the new bourse to be opened in the commercial capital of Ho Chi Minh City, it said. Last month the government also shelved plans to allow new forms of foreign business partnerships and branches in Vietnam, the state-run weekly reported. The new legislation will make the repatriation of profits easier by allowing joint ventures to open overseas bank accounts with central bank approval, the Saigon Times Daily reported. It will also reduce witholding tax on repatriated profits by between two and three percentage points depending on the category. But in a tacit admission that the new legislation would fall short of expectations, Planning and Investment Minister Tran Xuan Gia insisted Monday that the statutory framework was only part of the government's plans to improve the investment climate. In an interview with the commercial capital's main daily Sai Gon Giai Phong (Liberated Saigon), Gia said some of the most serious problems facing foreign investors, such as the common practice of taking bribes, could not be tackled by legal amendments. "We should stop giving ourselves the right to ask foreign and domestic investors for bribes," said Gia, who was himself the subject of a communist party reprimand over a corruption scandal last month. AFP - May 17, 2000.