Focus on rules of foreign investment in Vietnam

Vietnam is the easternmost country on the Indochina Peninsula, which is bordered by China, Laos and Cambodia. It has advantageous natural conditions and rich mineral resources. Vietnam is a socialist state that officially espouses communism and is currently enjoying political stability. Since 1986, Vietnam has initiated a series of economic and political reforms and opening-up policies, and has embraced an economic development-centred policy that pushes it towards integration with the world economy.

In November, 2006, Vietnam joined the World Trade Organization (WTO), and after that the Vietnamese economy has kept a high growth rate, with the annual GDP growth in 2015 and 2016 running at 6.7% and 6.2%, respectively, and economic forecasts for 2017 to achieve 6.3%.

Attracting foreign investment

With the rapid development of the economy, Vietnam is becoming more and more attractive for foreign investors. Besides the political stability and economic growth, there are other factors that make the country attractive, such as: (1) Relatively low wages. The population of Vietnam is relatively young, with 64.33 million people at working age out of a population of 91.9 million; (2) Advantageous geographic location. As a coastal country with 3,260km of coastline, Vietnam has major sea ports that provide transportation convenience for traders; (3) Relatively friendly investment legal framework. The laws in Vietnam provide comprehensive basic legal protection and preferential policies for foreign investors; (4) High degree of openness. Investors can take advantage of the ASEAN Economic Community, Trans-Pacific Partnership and other free-trade platforms to access the international market; and (5) Strong demand for infrastructure. With rapid economic development, the demand for infrastructure is increasing.

Wang Jihong is a partner and Sun Lifeng is a senior associate at Zhong Lun Law Firm