European investors worry about intellectual property in Vietnam

As of August 2017, Vietnam has attracted US$308.5 billion in foreign direct investment (FDI) from 122 countries and territories, with the largest investors being from Asian countries, such as the Republic of Korea, Japan and Singapore.

According to data compiled by the Foreign Investment Agency, the Netherlands remains the largest European investor in Vietnam, with 195 projects worth US$7.98 billion, ranking 11th among the investors in Vietnam. The United Kingdom and France are also investing heavily in Vietnam. However, their investment capital is small compared to that of Asian countries.

European countries have not paid much attention to investment in Vietnam due to its investment environment. Although improvements have been made in recent years, foreign investors still encounter problems. These include constant changes in legal frameworks and government policy, as well as the high official and unofficial costs of doing business in Vietnam. The lack of transparency in the Vietnamese investment environment has also soured European investors on investment in Vietnam.

Nguyen Quang Bao, deputy director of Viet Capital Securities, said European investors are interested in Vietnam. However, the market size does not have the required capacity to absorb significant capital flows from European countries.

The Business Climate Index (BCI) of the European Chamber of Commerce in Vietnam (EuroCham) for the first quarter of 2017 dropped seven points against last quarter’s score, to 78. Although business conditions in Vietnam have garnered praise, market barriers and trade liberalization have not satisfied European investors, according to the index.

An additional obstacle is the issue of intellectual property in Vietnam, which foreign investors regard as not sufficiently developed and posing risks to business.

Tomaso Andreatta, deputy chairman of EuroCham, said although Vietnam has improved its legal framework and enforced intellectual property rights, these factors remain a concern for European investors.

To attract more capital flows from European investors, the Vietnamese government needs to strictly deal with intellectual property violations. Vietnamese investors often choose to settle disputes by international arbitration, especially in large transactions, and the Vietnamese government should actively encourage local courts to enforce the resulting decisions.

Tomaso Andreatta, deputy chairman of EuroCham, said stricter protection of intellectual property rights is a prerequisite for encouraging foreign investment in Vietnam.

Chu Dan / VEN