~ Le Viêt Nam, aujourd'hui. ~
The Vietnam News

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Making Vietnam more inviting for investors

If lightning strikes Bero Vietnam's coffee warehouse, the beans will be safe as can be. That's because the management board of the industrial park in southern Binh Duong province replaced the lightning shield even before the company knew there was a problem, recounts John Burdsall, director of the coffee-processing and export firm owned by Germany's Neumann Group. Burdsall has grown to expect such proactive concern since setting up shop last February. "They come and visit me, just to see if I'm happy," he says.

For companies looking to invest in Vietnam, one of the most important decisions is choosing a good industrial park. At present, it's a mixed bag. With 71 industrial zones and three export-processing zones scattered across 30 provinces, facilities vary widely. At some parks, companies will find wastewater treatment plants, broadband Internet access, plentiful power and on-site customs offices. Others have barely any infrastructure at all. The management varies, too, though all parks are supervised by provincial officials. Some parks are run by private domestic firms or foreign-invested joint ventures, while others are managed by the state. Clearly, parks in more remote provinces are hard-pressed compared to those near Hanoi or Ho Chi Minh City, which have good road access to ports.

But those discrepancies can work to the investor's advantage. With provincial officials avidly competing to lure companies and boost local employment, they are dangling a variety of tax breaks, rental discounts and other amenities. For example, investors choosing among Haiphong's three functioning parks (12 others are still under development) can expect up to 15 years of free rent, and the park will subsidize up to 30% of the cost of local training carried out by the foreign company. In the central city of Danang, officials hope to entice foreign executives with tourist distractions along with business amenities. "We have an unpolluted environment and proximity to three World Heritage sites," says Lam Quang Minh, director of the Danang Investment Promotion Centre.

Some incentives do seem a bit odd. In northern Hai Duong province, for example, the management board claims it will pay up to 1 billion dong ($65,000) to sweep the company's plot for landmines. Throughout Vietnam, decisions on investment licences have been decentralized. For provinces still burdened by obstructionist officials, this has caused some problems. But overall, the new system has been yielding licences in two weeks or less. In Hanoi and Ho Chi Minh City, officials can approve investments of up to $10 million independently of the central government; elsewhere the cap is $5 million. For investments exceeding that amount, provincial officials must submit forms to ministries concerned in Hanoi. If Hanoi fails to respond within a week, the local officials have a green light to issue the licence.

For Henry Chua, deputy general director for the Vietnam-Singapore Industrial Park in Binh Duong, Vietnam's policy direction is a big selling point. "In 2003," Chua predicts, "foreign investors will be convinced that Vietnam is a forward-looking country."

By Margot Cohen - The Far Eastern Economic Review - January 23, 2003.