ABSTRACT
Opening of the economy to foreign direct investment has been an important element of Vietnam’s ‘renovation’ (doi moi) reforms initiated in 1986. With a slow and hesitant start in the late 1980s, the foreign investment regime was considerably liberalized in the first half of the 1990s as part of a broader liberalization reform package designed to reshape the former closed command economy into a market-based economy. The reform process lost momentum between 1996 and 1998 partly due to economic uncertainty created by the East Asian crisis, but partly (perhaps even more so) due to domestic policy ambivalence and complacency resulting from the success of the initial reforms. There has, however, been a renewed emphasis on completing the unfinished reform agenda since the late 1990s. Notable recent reforms include permitting previously-established foreign invested enterprises (FIEs) to reconstitute as fully-owned subsidiaries, streamlining/ simplification of investment approval and monitoring processes under a unified investment law applicable to both foreign and local investors, removal of local-content and export-performance requirements and restrictions on technology transfer, and the announcement of an action plan to reconstitute all state-owned enterprises (SOEs) as private limited liability companies or joint-stock companies with opportunities for FIEs to participate in the process.
