Vietnam tightens FDI rules as China/US trade tensions see more manufacturing relocating from China

September 11, 2019

HO CHI MINH CITY - In the context of escalating trade tensions between the US and China, more foreign and even Chinese manufacturers are moving their factories out of China to Vietnam, says Vietnam Asset Management (VAM) in its monthly newsletter for investors. "This gives Vietnam both opportunities and challenges," VAM says.

"The FDI sector has always been one of Vietnam's main growth drivers. It has contributed around two-thirds of the country's total export value in the last decades.

"However, the Government has become more selective in approving FDI investment projects as it wants to reduce the number of small-scale, low-tech, labour-intensive projects that account for a significant portion of FDI investment projects.

On August 20, the Politburo (the highest body of Vietnam's ruling party) issued Resolution No 50 .

"This aims to improve the quality of FDI projects, increase the localisation rate, offer tax and other incentives for technology transfer, and create a better investment environment.

"With proper implementation, this will help Vietnam manage FDI investment more effectively." (ATI).