VietNamNet Bridge – As of late February, Vietnam had attracted 14,550 valid FDI projects with a total capitalization of US$211 billion, of which almost US$100 billion was already disbursed.
The information was released at the Ministry of Planning and Investment (MPI) conference in Hanoi on March 27, reviewing 25 years of foreign direct investment (FDI) in Vietnam.
MPI Deputy Minister Dao Quang Thu said FDI has significantly contributed to year-on-year growth of GDP over the years, which hit 19 percent in 2011. It has also provided additional capital for the national economy, accounting for 25 percent of total investments, as well as boosting export earnings, constituting 64 percent of 2012’s total export revenue.
FDI has also helped expand international markets for Vietnamese goods and services, and considerably added to State revenue (US$ 14.2 billion in the 2001-2010 period; US$3.7 billion in 2012 alone).
Through foreign-invested projects, modern technology, equipment acquisition, expertise and management experience have been transferred into the country and around 6 million jobs have been generated, either directly or indirectly.
In his speech at the conference, Prime Minister Nguyen Tan Dung praised the achievements that ministries, industry sectors and localities have made in attracting FDI capital over the past 25 years.
Vietnam has been increasingly favoured by foreign investors to run long-term business in the country, Dung noted.
However, Dung pointed out several weaknesses in foreign invested sectors that will need to be addressed, such as the significant imbalance in foreign investment injected in some sectors, slow investment disbursement, and low quantities of content of technology transfer in some projects.
He asked the ministries, sectors and localities to join forces by adopting generous incentives for the kind of large-scale socio-economic infrastructure projects that are able to produce enormous, positive impacts on the country’s socio-economic growth, and also by taking moves to invite foreign investors to Public-Private Partnerships (PPP) projects.
The ministries sectors and localities are instructed to supplement regulations on hi-tech business criterion, mechanisms to develop support industries and capital and financial markets, and environmental protection standards.
At the same time, foreign investors will be encouraged to work with local universities and colleges to train up a high-quality workforce for the nation.
Approved socio-economic infrastructure planning schemes will be made public to enable foreign investors to have wider access to planning information and provide greater certainty for establishing related projects, PM Dung said.
The future promotion of investment activities needs to be coordinated on a national scale to prevent unhealthy competition among localities.
There should also be a closer coordination between the relevant agencies to raise localities’ responsibilities for the attraction and use of FDI capital, Dung noted.
FDI boosts Vietnam’s economic growth
Minister of Planning and Investment Bui Quang Vinh has spoken highly of the positive contribution of foreign direct investment (FDI) to Vietnam’s economic growth over the past 25 years.
FDI efficiency beyond expectation
Minister Vinh said that since the Foreign Investment Law took effect in 1987, FDI has helped Vietnam open its market and integrate deeper into the world economy.
FDI has raised Vietnam’s total social investment, provided fresh impetus to economic restructuring, increased production capacity, upgraded technology, expanded overseas markets, improved the balance of payment, contributed to the State budget, and developed higher-quality human resources. The foreign-invested sector is remarkably influential on other economic sectors, increasing competitiveness, promoting technology transfers, raising productivity, developing support industries, and improving Vietnam’s participation in the global supply chain, he said.
Minister Vinh cited some of major international companies which have succeeded in developing their brands in Vietnam, such as BP, Total, Toyota, Canon, Samsung, Intel, and Unilever and supporting domestic businesses on the way to globalisation. FDI inflows have helped restructure State-owned enterprise (SOEs), promote administrative reform, and reinforce the institutions of the market economy.
For whatever it’s worth, Vinh said, not all FDI projects have paid off well as expecped. The ratio of high technology application and employment rates remain low. Some localities have granted licenses to FDI projects which are not included in zoning plans, paying no heed to national security, environmental protection, and social benefits.
FDI attraction in focus
Minister Vinh said FDI has become an increasingly important fuel for Vietnam’s economic growth, especially in the current context of global economic slowdown and official development assistance (ODA) reduction.
To develop Vietnam into a modern industrial country by 2020, he said, FDI attraction must focus on environmentally friendly projects using advanced technology in line with economic restructuring plans in different regions and sectors.
Vinh stressed the need to develop large-scaled projects with products capable of competing in the global supply chain of transnational groups, promote the support industry and expand inter-sector networks.
FDI inflows should be used to full advantage where projects are designed to stimulate local growth and protect national interests, he added.
The Minister suggested FDI businesses recruit high-quality human resources instead of low-cost labour.
Vinh insisted that top priority should be given to macroeconomic stability, domestic market expansion, infrastructure upgrade, and human resource development. Local business networks need expanding to improve the business climate.
Minister Vinh also underscored the importance of completing a legal system that generates a consistent and transparent investment environment with accurate forecasting capacity and adopting incentive policies to attract more foreign investors to certain key sectors and regions.
Vinh proposed strengthening FDI management inspection in localities on a regular basis.
In the near future, he said, the Government should continue pushing through administrative reform by simplifying procedures for businesses and producers, preventing wastefulness and combating corruption at any cost.