This presentation outlines the investment policy review process that the government of Viet Nam is undertaking in partnership with the the OECD and ASEAN as part of an active programme of investment policy reforms. To find out more visit: http://www.oecd.org/daf/inv/investment-policy/viet-nam-investment-policy.htm

1. OECD Investment Policy Review
of Viet Nam
31 March 2015, Hanoi
1Government of
Viet Nam

2. 1. The OECD
2. The Policy Framework for Investment
3. Investment Policy Review of Viet Nam
Structure of the presentation
2

3. 1. The Organisation for
Economic Co-operation and
Development
3

4. What is the OECD?
4
 34 members, incl. Japan,
Korea, Australia and NZ
 Close cooperation with non-
members on areas of mutual
interest
 All policies areas, except
defence and sports
 250 committees, working
groups, expert groups
 2500 staffBetter policies for better lives

5. How the OECD works
5
 Evidence-based analysis
 Promotes reforms by
convincing governments that
it is in their own self-interest
 Does not disburse grant
money
 Operates based on
consensus
 Has no disciplinary powers
other than moral suasion

6. Recent OECD work with Viet Nam
6
Forthcoming: OECD Agricultural Policy Review of Viet Nam

7. 2. The Policy Framework for
Investment
7

8. Investment
policy
Investment
promotion and
facilitation
Trade
Competition
Tax
Corporate
governance
Policies for
promoting
responsible
business conduct
Human resource
development
Public governance
Infrastructure
investment
Investment
framework for
green growth
Financial sector
development
Governance:
transparency,
stability/predictability,
coherence,
effectiveness
A multilaterally-backed
instrument to improve the
investment climate,
building on good practices
A comprehensive
framework covering
numerous policy areas
affecting the investment
climate
The PFI is….
Covers both
domestic & foreign
investment

9. Non-prescriptive &
non-binding
Flexible
Comprehensive
How the PFI works
Self-assessment by Government
(in cooperation with OECD)
9

10. A checklist of questions in key policy areas
10
Investment Policy • Market opportunities, risks, exit barriers
Policy areas Affecting investment through multiple channels
Investment promotion & facilitation • Transaction (red tape) and information costs
Trade Policy • Cost of inputs, size of market, competition
Competition Policy
• Market opportunities, productivity, benefit sharing
with workers and consumers
Tax policy (incentives) • Returns to investor, benefits to government
Corporate Governance • Corporate efficiency, cost of capital
Responsible Business Conduct • Social and environmental risks,
Human Resource Development • Supply and quality of labour, innovation
Investment in Infrastructure • Cost of inputs, market size, productivity etc.
Financing Investment • Supply, cost and access to capital etc.
Public governance
• Regulatory quality and predictability, cost of
doing business etc.
Investment for Green Growth • Input costs; environmental externalities

11. Investment Policy Reviews
– Comprehensive (many policy areas)
– Thematic (one policy area, e.g. RBC)
– Sectoral (energy, agriculture)
Regional dialogue
– ASEAN, SADC, MENA, SE Europe
Capacity building
– APEC, ASEAN (CLMV) and at country level
Development assistance
– IFC, JICA, Finland
How the PFI has been used
11

12. OECD Investment Policy Reviews since 2006
Sub-Saharan Africa
 Zambia
 Burkina Faso
 Mozambique
 Botswana
 Tanzania
 Mauritius
 Nigeria
Asia
 India
 Cambodia
 China (2)
 Viet Nam* (2)
 Indonesia
 Lao PDR*
 Malaysia
 Myanmar
 Philippines*
MENA
 Egypt
 Morocco
 Tunisia
 Jordan
Latin America
 Peru
 Costa Rica
 Colombia
Eurasia
 Ukraine (2)*
 Russia
 Kazakhstan
* On-going or planned
12

13. Updating the PFI
Over 25 countries have used the PFI in IPRs and many more in regional
discussions
Need to update the instrument, incorporate new dimensions and
receive users’ feedback
Task Force meetings in regions and OECD headquarters, technical
revisions in OECD committees, web-based consultations
Task Force co-chaired by Finland and Myanmar
Updated PFI in 2015
• Global landscape of investment has changed (e.g. GVCs, RBC)
• New policy challenges, players, priorities
13

14. 3. Investment Policy Review of
Viet Nam
14

15. Second IPR in 2015-2016:
• New challenges and context
• Evolving policy environment (e.g. consecutive
revisions of investment law)
• More in-depth analysis using the updated PFI
• Additional policy areas:
– Responsible business conduct
– Infrastructure investment
– Corporate governance
• Greater focus on how to implement
recommendations
First IPR in 2008-2009
15
• Investment Policy
• Investment Promotion
& Facilitation
• Trade Policy
• Competition Policy
• Tax Policy
• Financial Sector
Development

16. 2015
March OECD mission, PFI presentation to the Taskforce
April-July Government prepares answers to PFI questionnaire
July
Second OECD mission to discuss answers to questionnaire and
for further fact-finding
August-Dec. OECD prepares draft report. Third OECD mission.
2016
January-Feb. Government comments on draft report
March
OECD-Government Seminar with ministries and stakeholders in
Hanoi to discuss draft IPR of Viet Nam
June
Presentation of draft IPR to OECD Investment Committee in Paris
Revised draft IPR circulated for final comments
September IPR of Viet Nam launched in Viet Nam
Follow-up
Results presented at regional or sub-regional level (including the
Regional Policy Network for Investment), other activities
Suggested timeline
16

17. 1. Introduction
2. Investment trends and performance
3. Investment policy & horizontal policies affecting
investment
4. Investment promotion & facilitation
5. Policies to promote responsible business conduct
6. Infrastructure investment
7. Corporate governance (including of SOEs)
8. Other areas of the PFI
– Competition, finance, incentives
Structure of the second IPR of Viet Nam
17

18. • What benefits do the revised laws on bankruptcy, enterprise,
investment and land offer?
• How to improve implementation of laws and regulations?
• How to make most effective use of Viet Nam’s participation in on-
going and future free trade agreements?
• How to minimise the potential for investment disputes leading to
international arbitration?
• How to further diversify inward FDI by sector and by country?
• How to integrate further into GVCs? How to raise local value
addition and linkages?
• How to improve the performance of SOEs and the domestic
private sector?
• How to further improve the PPP framework?
Some areas to be addressed
18

19. • A whole-of-government approach to investment policy
making
• Benchmark relative performance and progress over time
• An opportunity to showcase recent reforms to partner
countries and the international investment community
• Recommendations based on good practices in both
OECD and emerging economies
• Assistance in implementing reforms through donor
agencies and the World Bank
• Capacity building can also be provided on an ad hoc
basis where necessary
Benefits to Viet Nam
19

20. • Provide guidance in
assessing which policies
and practices are most
likely to create obstacles to
domestic and foreign
investment
PFI questions and
supplemental
questions
• Helps to improve political
feasibility
• Broad public consultations
with stakeholders about
reform priorities
• Identification of what is in
the national interest
• Creation of groups within
the government to lobby in
favour of improvements in
the investment climate
• Helps to build a
constituency for reform
Transparent
assessment of policy
options
• PFI helps to identify where
capacity constraints may
exist so the aid community
can respond
• Develop administrative
capacity through the
process of undertaking PFI
assessments itself
• Information library for PFI
users concerning
international best practices
Diagnosing the factors
impinging on the
investment climate
Supporting investment reform

21. OECD Investment Policy Review of
Myanmar
21
“The recommendations from the Review are candid,
impartial and highly practical.”
Aung Naing Oo, Director General,
Ministry of National Planning and Economic Development, Myanmar

22.  Challenges identified
 Recent and planned reforms
 Impact of past reforms
 Always refer to – and attach (if possible):
 legal texts
 strategic documents
 existing studies
 useful websites
 other relevant documents
How to answer the questionnaire
22

23. ANNEX
23

24. INVESTMENT POLICY

25. - Entry and
establishment
- Ownership and control
- Operational
restrictions
- Authorisation and
reporting
- Sectoral limitations
- Standards of treatment
(NT, MFN, FET)
- Expropriation
- Transfer of funds
- Dispute settlement
- Transparency
- Etc.
REDUCING
STRENGHTENING
Investment Policy
25
Regulation Protection

26. Strategy
 What is the role of private investment, including by foreigners and SMEs,
within the country’s overall development strategy?
Legislation
 How is the strategy reflected in the investment law or other laws and in
commitments under bilateral, regional or multilateral agreements?
Implementation
 Who manages the overall coordination of investment policy making?
 Is there a formal process for monitoring and improving the investment
climate? Who is in charge of this process?
 How is feedback from stakeholders taken into account?
 Is there an advocate for investment climate reform within the government?
Investment climate strategy

27. Areas covered in investment
policy
 Legal framework for investment
 Non-discrimination and national treatment
 Land ownership and registration
 Intellectual property rights
 Contract enforcement and investment dispute settlement
 Expropriation regime
 Investment treaty policy
27

28. INVESTMENT PROMOTION
& FACILITATION

29. Investme
nt
attraction
Foreign Investment
Agency
Business
facilitation
Integration
in
GVCs/RVCs
Co-ordination
with other
agencies
Linkages
promotion
Regulator
y reforms
Co-ordination with
Provinces
Investment
facilitation
Institutional framework for investment
promotion and facilitation
29

30. Good policies Promotion
Facilitation:
Establishment
and post-
establishment
After-care
services
Policy Advocacy
investor feedback to policies: surveys,
public-private committees, participation in
task force, policy and legal proposals,
reporting investor's perceptions...
Investment promotion and facilitation
depends on the quality of policies
Best performing IPAs are good policy
advocators

31.  Strong supplier base is an important investment decision
factor
 Channel for technology and knowledge transfer;
 Proactive measures to promote business linkages and build
capacities of SMEs
 Efforts by the government to address skills shortages
(HRD, training facilities, etc.)
 Role of SEZs/IPs
 Building research, innovation capacity
 Promoting partnerships with the private sector in skills upgrading
 Linkages with domestic firms or economic enclaves?
Promotion of business linkages
Making investment work for development
31

32. RESPONSIBLE BUSINESS
CONDUCT

33. Responsible Business Conduct
Responsible business conduct (RBC) means that businesses
should:
• a) contribute positively to economic, environmental and
social progress to achieve sustainable development and
• b) avoid and address adverse impacts through their own
activities and prevent or mitigate adverse impacts directly linked
to their operations, products or services by a business relationship.
Risk-based due diligence is a key element of RBC by identifying,
preventing and mitigating actual and potential adverse impacts.

34. The RBC chapter of the PFI included questions on promoting
responsible business conduct related to:
1. Clear separation of government and business roles
2. Promoting effective two-way communication: law making and
other dialogue
3. Providing an adequate framework for corporate disclosure
4. Enlisting business as a partner in the legal and regulatory
system
5. Strengthening the business case for responsible conduct
6. Intergovernmental co-operation
Policy Framework for Investment: chapter
on responsible business conduct

35. CORPORATE GOVERNANCE
OF STATE-OWNED
ENTERPRISES

36.  OECD Principles of Corporate Governance:
The degree to which corporations observe basic
principles of good corporate governance is an
increasingly important factor for investment
decisions
 The OECD Guidelines on Corporate
Governance of State-Owned Enterprises
offers an important complementary set of
recommendations
 Ensuring accountable, transparent and well-
governed SOEs
Corporate governance of SOEs

37. INFRASTRUCTURE
DEVELOPMENT

38. • Ensure coherence and support for infrastructure development
– Planning of infrastructure development:
– What are the needs and strategy for infrastructure?
Credible project pipeline and clear private sector role?
– What consultation mechanisms are used to ensure
projects correspond to needs and expectations?;
Do agencies coordinate to ensure coherence?
Infrastructure chapter (1/3)
38
• Create a suitable enabling environment for
investment in infrastructure
– Regulatory & institutional environment
– What is the legal regime for investment in infrastructure (laws and
agencies and mandates)? Are these clear and transparent? Regulatory
Impact assessments? How is corruption being prevented?
– Is the public procurement system transparent and efficient in promoting
competition? Are there still barriers to entry for investors? Are
competition laws being enforced?

39. • Mitigate risk and ensure value for money
– Selecting and prioritising projects; enhancing implementation
– Are cost-benefit analysis, taking into account alternative modes of
delivery, full range of risks, undertaken?
– How are risks identified and allocated? Are fiscal liabilities transparently
accounted for in the budget?
– What has been done to improve preparation, selection and
implementation of projects (e.g. PPP unit, output based contract
specifications; performance monitoring system)?
• Ensure adequate regulation and pricing of infrastructure markets
– Predictability and viability of infrastructure projects
– Are regulatory agencies independent, adequately resourced and
accountable? Do SOEs compete on equal terms with private firms?
– How the government strike balance in tariff setting (cost and
affordability)? When subsidies are needed, what has been done to use it
more efficiently?
Infrastructure chapter (2/3)
39

40. • Increase the supply of financing for infrastructure projects
– Facilitate financing of infrastructure
– What has been done to leverage sources of finance to infrastructure
projects and mitigate shortfalls if insufficient cost recovery?
– Is ODA used to mitigate project risks and leverage private investment?
– Are there obstacles for investors to bring in and out international capital
if needed?
• Encourage inclusiveness and responsible business conduct
– Predictability and viability of infrastructure projects
– Broad-based stakeholder consultations
– Environmental & social impact assessments
– Ensure resilience of infrastructure to climate change
– Ensure that both public & private providers observe RBC standards and
perform adequate due diligence to identify, manage & monitor any
environmental & social risks
Infrastructure chapter (3/3)b
40

41. THANK YOU!
stephen.thomsen@oecd.org
alexandre.decrombrugghe@oecd.org
fernando.mistura@oecd.org