Dragon Capital, VinaCapital, Mitsubishi outline proposals to attract high-quality FDI

Executives from Dragon Capital, VinaCapital and Mitsubishi Corporation called on Vietnam to accelerate stock market reforms, lower capital costs, strengthen domestic supply chains and deepen links between foreign-invested and local companies to attract higher-quality foreign direct investment.

The proposals were presented at a national conference on Tuesday following the Politburo's issuance of Resolution 10, which shifts Vietnam's FDI strategy toward attracting investment that delivers advanced technology, modern governance, skilled labor and sustainable development.

Dominic Scriven, chairman of Dragon Capital, said the resolution sends a positive signal to international investors by reaffirming that the foreign-invested sector is an integral part of Vietnam's economy and should receive equal treatment with other economic sectors.

Given that businesses still face significantly higher capital costs than the government, Scriven argues that Vietnam needs solutions to narrow this cost-of-capital gap.

Accordingly, Dragon Capital proposes exploring mechanisms to encourage foreign-invested enterprises (FIEs) to retain their earnings in Vietnam - specifically through appropriate interest rate policies for USD deposits - thereby helping provide a more stable source of foreign currency for the economy.

He urged Vietnam to accelerate its roadmap for upgrading the stock market to emerging market status before 2030, complete the central counterparty (CCP) clearing system, ease foreign ownership limits in non-sensitive sectors, and improve the foreign exchange framework for international investors.

In addition, Dragon Capital proposes adjusting the regulation that prohibits companies with accumulated losses from listing, in order to better align with the specific characteristics of enterprises in the technology, innovation and artificial intelligence sectors; simultaneously, it advocates for fostering the development of the International Financial Center (located in both Ho Chi Minh City and Danang) and expanding the domestic institutional investor base to enhance capital market stability.

Michael Kokalari, chief economist at VinaCapital, said Resolution 10 could strengthen linkages between foreign-invested enterprises and domestic companies, making Vietnam more attractive to global investors.

He said Vietnam should continue investing in large-scale infrastructure projects to sustain long-term growth. This is also an area where international investors can partner by providing long-term capital.

The country should also pursue reforms needed for an upgrade by MSCI to emerging market status, including launching the CCP system, expanding foreign ownership limits where appropriate, improving corporate governance and transparency, and developing currency hedging instruments for foreign portfolio investors.

Vietnam needs to bring the International Financial Center into operation soon to create an additional channel for attracting foreign capital. It should also accelerate the equitization of state-owned enterprises, IPOs, and capital-raising activities to increase the scale and quality of securities available on the stock market.

Kokalari added that many global investment funds managing hundreds of billions of dollars are closely monitoring Vietnam and could significantly increase allocations once the country achieves MSCI emerging market status.

Takuya Sahashi, vice president of Mitsubishi Corporation Vietnam, said Vietnam should strengthen the capabilities of domestic companies so they can participate more deeply in global supply chains and absorb advanced technology and management practices.

After more than 30 years of investing in Vietnam, Japanese enterprises have contributed to the development of the electronics, machinery and transport equipment sectors, while also focusing on workforce training, technology transfer and increasing the localization rate.

He added that the country should support competitive local suppliers, develop upstream materials and components industries, expand supplier databases and business matching platforms, simplify support policies for small and medium-sized enterprises, and invest more in workforce development to improve technology absorption.