Spot checks designed to keep decentralisation on its toes

The road ahead offers local bodies greater freedom to drive investment projects ahead

Investigations will centre on local governments’ issuance and repeal of foreign-invested projects, conformity of projects with local socio-economic development strategies, land allocation and clearance activities, as well the local ability to draw foreign direct investment (FDI) inflows.

Regular investigations, in line with the Minister of Planning and Investment (MPI) Vo Hong Phuc’s decision No 1190 issued last week, will be set up by the MPI’s departments and divisions including the Foreign Investment Agency (FIA) and Department for Management of Industrial and Export Processing Zones. Spot checks will be made in cases where investment disputes arise.

A senior FIA official told VIR that while the investigations were not new, there was now a legal framework for them to work through. “As soon as decentralisation became effective in accordance with the Investment Law passed in 2005, the FIA has frequently organised checking tours to major FDI cities and provinces to keep track of foreign investment activities across the nation,” said the official.

The FIA’s latest study tour was made in August to 22 cities and provinces to detect ill-fated FDI projects in response to the prime ministerial direction to accelerate FDI disbursement. Vietnam’s disbursed FDI capital is much lower than what has been registered. Disbursement was $4.6 billion out of $12 billion registered in 2006, $8 billion out of $21.3 billion in 2007 and $8 billion out of $57.1 billion in the first nine months of 2008, according to FIA reports.

“Some cities and provinces including major FDI localities like Ho Chi Minh City and Binh Duong have neglected reporting FDI-related activities,” said the official. Together with legalised reporting mechanism to put transparent FDI state management in place, MPI will also host regular meetings with foreign investors to address problems when doing business in Vietnam.