Reforms in FDI Policy and the Investment Climate in Vietnam

This article surveys the evolution of foreign direct investment policy since the initiation of renovation reforms (Doi moi) in 1987 and current state of the policy regime. It is shown that following a period of slow progress of over a decade, the reform processed gained momentum in the aftermaths of the Asian fi nancial crisis(1997–1998) and accelerated in the course of the WTO accession process. Reforms over the past five years have virtually eliminated ownership restrictions and streamlined procedures for business entry and operation, ensuring a level playing field for business ventures of all ownership types. However, there are still various institutional constraints and infrastructure bottlenecks that need to be redressed in order to improve Vietnam’s ranking among the dynamic East Asian economies as an attractive location for foreign investment.