Making sports shoes for export at Freetrend Industrial Co. Ltd. (an FDI business in HCMC) (Photo: SGGP)

Article 7 of Resolution 98 stipulates the list of prioritized industries to attract strategic investors, the conditions that those investors must meet, the procedure to register for a project, incentives and responsibilities of strategic investors. This breakthrough policy with wide effects is developed to provide more convenience and accelerate the time to carry out investment procedures, ultimately encouraging those people to pour more money into HCMC.

The Standing Committee of the National Assembly admitted that HCMC is facing fierce competitions from other regions. However, it does not have any legal corridor superior to either other places in the country or other investors in the region. Normal bidding procedures to select strategic investors are not appealing to large corporations since the project roadmap is unclear and the implementation time is too long, leading to possible negative effects on the brand name and corporation value if they are not chosen.

Without a strong mechanism, HCMC is not able to compete with other nations when strategic investors are considering incentives mechanisms, support, implementation time and location.

As to attracting strategic investors for hi-tech Foreign Direct Investment (FDI) projects, even though HCMC is applying various preferential policies, the results are not as expected. What is more, because the land resources for industrial manufacturing projects are rather limited, it is wiser to focus on hi-tech industries that require less land use.

Nguyen Xuan Thanh from Fulbright School of Public Policy and Management, member of the Consultation Council for Resolution 98 Implementation, said that many investors consider Vietnam as an attractive destination in the global supply chain shift, and that these people, especially the ones in the fields of semiconductor and manufacturing, are waiting for HCMC to introduce sustainable mechanisms and policies for long-term investment.

The concerned point in Resolution 98 is that when there are two strategic investors meeting all requirements, a bidding session must be held to select one. This is rather discouraging to strategic investors, so many experts proposed an integration with the mechanism for appointing strategic investors into the investment policy.

Also, it is important to include leading domestic investors in the process to select a strategic investor for a project, said Prof. Dr. Tran Dinh Thien, former Head of the Vietnam Institute of Economics.

Dr. Tran Du Lich, Head of the Consultation Council for Resolution 98 Implementation, agreed that asking large investors with thousands of billions of VND to take part in a bidding session to choose the winner for a project might be consider an act of disrespect to them, which is not wise at all to do.

Other professionals voiced a challenge in attracting strategic investors in infrastructure projects under the Public-Private Partnership (PPP) model. Since this model requires the state budget, if HCMC cannot prepare sufficient capital, it is impossible to carry out PPP projects. Besides preparing enough budget, the city must be extremely careful of risk guarantees and risk provisions when preparing the contract to avoid unwanted disputes.