Foreign Investment and Investment Arbitration in Vietnam

Summary

INTRODUCTION

Vietnam has a rapidly growing economy, driven by a young, energetic and educated population with an average annual per capita GDP growth of 5.3 percent over the last 30 years, beyond the expansion rate of any other Asian economy other than China. The country has pursued economic liberalisation policies for the past 30 years, which emphasises the attraction of foreign investment as a key strategy for its economic development. Vietnam's WTO accession in 2007 was a key milestone, in addition to various multilateral and bilateral trade and investment treaties that the country has acceded or entered into. The government has recently passed legislation to ease foreign investment further and opportunities are available for foreign investors looking to move into the country.

Vietnam continues to be a single party state dominated by the Communist Party (CPV), but since December 1986 has been initiating a number of economic reforms to move Vietnam towards being a socialist-oriented market economy. These reforms – called ‘Doi Moi’ in Vietnamese, which translates as ‘renovation’ and is an appropriate appellation for the purpose of the policies – have been the basis to reduce reliance on state-owned enterprises and to allow private enterprises to play a more prominent role in the economy while retaining a central role for the state.

The Doi Moi reforming policies were a reaction and solution to Vietnam's economic outlook in the 1980s, which, at the time still reeling from decades of war, was blighted by high inflation, heavy dependence on imports and foreign assistance, and economic embargoes. Attracting foreign direct investment (FDI) was and remains a major part of Vietnam's economic policy, which has contributed significantly to Vietnam's remarkable economic growth over the past 30 years.

Vietnam enacted its first Law on Foreign Investment in 1987 making it a relative newcomer in comparison to its Southeast Asian neighbours in terms of opening to foreign investment. However, FDI has grown steadily since that initial period with 211 licensed FDI projects in the period 1988–90 rising to 2,216 being licensed in 2016 alone with a total registered capital of approximately USD 18 billion for 2016. Vietnam's attitude and policies towards FDI are considered quite liberal in comparison with other Southeast Asian countries.