Vietnam plans to improve its legal framework to create a favourable investment environment and help the state better manage these activities, said an official from the Ministry of Planning and Investment at a recent seminar in Hanoi.

Since economic reforms began in 1986, FDI has played an important role in international integration and economic development, Deputy Minister of Planning and Investment Dang Tien Dong said at the seminar.

After Vietnam entered the World Trade Organisation (WTO), FDI soared, but in 2011, registered FDI saw a year-on-year drop of 21.6 percent to 15.6 billion USD and disbursement of FDI reached only 11 billion USD– the same level as in 2010.

Registered FDI in 2012 saw a slight increase of 4.8 percent to 16.35 billion USD while disbursement of FDI dropped to 10.46 billion USD.

There was a recovery in 2013 with total registered FDI of 22.35 billion USD, 36.7 percent higher than in 2012. Disbursement of FDI also increased 9.9 percent to 11.5 billion USD.

However, many experts said the recovery was not sustainable and growth in Vietnam was lower than other regional countries. In the first four months of this year, FDI fell 41 percent to 4.85 billion USD while disbursement of FDI continued to grow by 6.7 percent to 4 billion USD against the same period last year.

Additionally, almost all FDI projects in Vietnam are small and medium scale. FDI projects with capital of 100-500 million USD accounted for only 1.51 percent of the total, while those with capital of between 500 million - 1 billion USD accounted for 0.19 percent and those with over 1 billion USD accounted for barely 0.2 percent.

Do Nhat Hoang, director of the Foreign Investment Agency, said that while Vietnam has a strict licensing process for FDI, management of operations is not strict enough. Therefore, the country should reform administrative procedures, improve infrastructure, develop the support industry and focus on training a high-quality workforce, Hoang said.

Dong said Vietnam faces challenges in wooing investors, competing with regional and global rivals and simplifying administrative formalities.

To improve the investment climate and State agencies' capacity to manage foreign capital, participants agreed that obstacles in the way of investment procedures should be examined.

Nguyen Anh Tuan, editor-in-chief of Vietnam Investment Review, said there were many issues when it came to enforcing the investment and enterprise laws, both promulgated in 2005.

Some articles were not concrete or suited to reality, while several regulations did not match international norms or the country's commitments to integration into the global economy, noted Tuan.

Director of the Central Institute for Economic Management Nguyen Dinh Cung said it is vital to restrict the withdrawal of business permits, adding that relevant agencies should only revoke the permits when necessary.

Chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE) Nguyen Mai said that various difficulties in managing foreign direct investment (FDI) enterprises would emerge if regulations on the establishment of such firms, especially those related to fields of business and minimum capital, were not specified.-VNA