Last updated: Wednesday, May 15, 2019


Attracting FDI in New Context: Key Strategy Needed

Posted: Wednesday, February 20, 2019

In order to clarify the major contribution of FDI inflows to the country's economy, recently, the Ministry of Planning and Investment cooperated with Binh Duong People's Committee to organize a conference “Institutional and policy consultation on FDI in the new context".

Large capital flow
Specifically, Deputy Minister of Planning and Investment Vu Dai Thang said, according to the task assigned by the Government, the Ministry of Planning and Investment (MPI) has collaborated with ministries, branches, localities, business associations and experts to draft the Project of Orientation to improve institutions and policies, improve the quality and efficiency of attracting and using FDI by 2030. In addition, the MPI has also evaluated the world, regional and domestic context especially the trend of international investment flows and the Industrial Revolution 4.0 and proposed key views, goals, orientations, tasks and solutions to improve the quality of FDI attraction and management by 2030.

Up to the present time, it can be affirmed that the macro policies focusing on attracting FDI are a right and successful policy of the country. Accordingly, the FDI sector has become an important part of the economy. Accumulated up to the end of January 20, 2019, the whole country has 27,463 valid FDI projects, with a total registered capital of about US$343 billion and a total implemented capital of more than US$192 billion. The proportion of FDI in the total development investment capital of the whole society remains at around 18-25%. According to experts, FDI has now become an organic part of the economy, making an important contribution to perfecting the socialist-oriented market economy institution, promoting economic restructuring, maintaining export growth momentum, increasing budget revenue, creating jobs, and shifting labor structure.

Strong spillover effects
According to the evaluation of many economic experts at home and abroad, the results of attracting and using FDI inflows by Vietnam in the past 30 years is proof that Vietnam’s international integration is growing. It can be seen that the FDI sector is an important additional source of capital in the total development investment capital of the whole society, promoting economic restructuring and forming a number of spearhead industries. At the same time, it contributes to increasing production capacity, playing a key role in exporting and restructuring export products, gradually bringing Vietnam's products to the production network and the whole value chain. FDI also promotes technology transfer in a number of sectors and fields, initially forming a linkage between the FDI sector and the domestic sector, promoting the development of supporting industries, contributing to the state budget, supporting the balance of payments, contributing to macroeconomic stability. FDI also promotes job creation, shifting employment structure, developing human resources, labor productivity of the economy and becoming a driving force of growth.

Another special highlight of FDI is a spillover effect on other areas of the economy through promoting innovation and technology transfer, creating competitive pressure, improving production efficiency in domestic enterprises. FDI is not only an important resource for socio-economic development, but also contributes to promoting the economic institutions and business investment environment in line with the market economy and international practices, contributing to the improvement of the position of Vietnam.

At the event, Deputy Prime Minister Vuong Dinh Hue frankly pointed out the inadequacies of this important capital flow, such as the need to develop new scenarios for technology transfer and management skills to help Vietnamese businesses join supply chain, global logistics. In addition, this approach to capital flow should also be focused on attracting high technology, having a "red carpet" policy to attract multinational corporations to "build teams", changing the policy attracting investment from capital criteria to value added effect of FDI inflows.

About the strong development of FDI inflows in Vietnam, Mr. Tetsu Funayama, Head of Business Committee, JCCI, Chairman and CEO of Mitsubishi Corporation Vietnam, said that the good news is that 66 of Japanese businesses choose Vietnam as their investment destination of the near future. But in fact, there are still some concerns from Japanese investors because Vietnam's supporting industry is not commensurate with the potential and demand of FDI enterprises. This is also a knot to reduce the attractiveness to foreign investors when investing in Vietnam. And to solve this problem, Japanese enterprises are willing to invest in expanding connectivity with Vietnamese enterprises, and at the same time providing solutions to support cooperation to train and foster experts, machine engineers and technical staff.

Meanwhile, Mr. Kim Han Yong, Chairman of the Korean Business Association in Vietnam, said that Korea is becoming a leading investor in Vietnam, but they face many barriers to technology transfer between FDI enterprises and Vietnam which include lack of human resources and science and technology. Mr. Kim Han Yong also proposed, in the coming time, Vietnam needs to standardize training programs to provide technical certificates for engineers and workers so that foreign enterprises can invest more in Vietnam and will not waste time and money recruiting workers. At the same time, administrative procedures need to be simplified, transparent and clearer.

Anh Phuong

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