Vietnam should focus on improving the investment environment and enhancing the consistency of policies to ensure the smooth investment capital flow into the country, foreign investors said at a conference in Ho Chi Minh City on Friday.

"Administrative procedures are not really smooth. The implementation of tax policies lacks consistency and is difficult to predict," said Jeong Ji-Hoon, vice president of the Korean Chamber of Commerce in Vietnam (KOCHAM), at the conference themed “Investment Funds and Foreign Investment in Vietnam’s New Era of Development,” organized by the Ministry of Finance.

According to Jeong, many South Korean businesses highly evaluate Vietnam for its potential and even consider the country as one of the top destinations for expanding investment. 

However, when it comes to actual investment and business activities, they face many challenges in administrative procedures.

The KOCHAM representative added that Vietnam needs to clarify regulations and procedures related to foreign direct investment, and ensure consistency in the implementation of policies to avoid discrepancies between localities.

Chung Seck, a lawyer at Baker McKenzie Vietnam and vice president of the Singapore Chamber of Commerce Vietnam, shared the same opinion, saying that despite improvements, Vietnam's legal environment remains a challenge for foreign investors.

Inconsistent law enforcement, bureaucracy, and a lack of transparency can hinder potential investors, said Chung Seck.

In order to attract and effectively use investment capital, Vietnam needs more quality investment products, which is a key factor in attracting and retaining foreign investors.

Albert Kwang Chin Ting, chairman of Phu Hung Securities Corporation and Phu Hung Fund Management JSC, suggested that in the short term, it is essential to accelerate the initial public offering (IPO) process of large corporations and state-owned enterprises. This could help increase the number of high-quality stocks in the market.

He recommended considering raising the foreign ownership limit to 65 percent in some industries. 

Albert Kwang Chin Ting said that Phu Hung had consulted with fund managers in Taipei to provide recommendations for attracting more indirect investors to Vietnam. 

Fund managers with capital over US$500 million each are unable to carry out transactions due to the foreign ownership limit, according to Albert Kwang Chin Ting.

Do Minh, country director for Vietnam at Warburg Pincus. Photo: Hong Phuc / Tuoi Tre

Do Minh, country director for Vietnam at Warburg Pincus, shared the view and proposed raising the foreign ownership limit for strategic and financial investors.

According to Minh, the current maximum foreign ownership rate in a commercial bank in Vietnam is 30 percent, which is much lower than that in other countries in the region, such as India (74 percent), Indonesia (99 percent), Thailand (no limit), or Singapore (no limit).

Even if it was raised to about 50 percent, the rate would still be lower than that in regional markets, Minh noted.

"We understand that the State Bank of Vietnam and the government are concerned that foreign banks holding controlling shares could affect economic sovereignty. However, this is less of an issue when applied to financial investors such as investment funds or strategic investors," Minh claimed.

Not only in the banking sector, Minh also emphasized the need to improve regulations on IPOs. 

He suggested that IPO regulations should take into account the characteristics of technology, fintech, and start-up businesses, which create many high-quality jobs but have business models that differ from traditional companies.

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