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Abstract
From the start of the transition, foreign direct investment (FDI) was expected to play a key role in upgrading the country’s infrastructure and productive capacity. It has indeed played that role. Disbursements, which have grown rapidly in the last few years, are projected at $1.4 billion in 1995 (almost 7 percent of GDP), and a large stock of committed capital remains to be disbursed. The Foreign Investment Law of December 9, 1987, while enacted somewhat later than comparable legislation in most other countries in the region, was one of Vietnam’s first major reform measures. It came at a time when virtually no supporting legal framework was in place and numerous elements of a centrally planned system still pervaded the economy. The original law was liberal by international standards; after several amendments, the juridical regime for FDI compares favorably with corresponding regimes elsewhere in terms of tax incentives, import privileges, access to economic sectors, and admissible ownership forms. Indeed, the law offers generous tax concessions and duty exemptions, welcomes foreign investment in all economic sectors with the exception of defense industries, imposes no minimum capital requirement, permits 100 percent foreign ownership, and guarantees the unrestricted repatriation of capital and profits.
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