Joint Ventures in the Socialist Republic of Vietnam: The First Six Years

December 1993 saw the sixth anniversary of Vietnam’s current foreign investment law (FIL), promulgated in December 1987 as a key element in the country’s economic reform program, doi moi. The FIL itself has been praised for its liberal stance on permitted forms of foreign direct investment (FDI), and the executive body established to oversee its enactment — the supraministerial State Committee for Cooperation & Investment (SCCI) — has gained recognition for its refreshingly flexible and pragmatic approach toward investors. In turn, this has been rewarded with intense Asia Pacific and European business interest, and the beginnings of a significant inflow of foreign capital. As of December 1993, approved FDI inflows totalled over US$7.5bn, and 1994 alone should witness a further US$3.5bn in pledged flows. (In August 1994, the total figure for pledged FDI inflows exceeded the US$10bn mark, recording the one thousandth FDI licence one month later.) For an avowedly socialist, less developed country, which until mid–1993 endured international economic censure under a multilateral lending veto, as well as an increasingly redundant US-led investment and trade embargo (Freeman, 1993), this has been no mean feat. The last remnants of the US embargo were lifted in February 1994. So why have overseas investors expended time, capital, and energy on this emerging host country market, which, as we shall see, provides some challenging hurdles for foreign firms?