Towards Quality-centred Investment Promotion

 

Currently, most provinces and cities have established specialised investment promotion agencies. Thus, they have made impressive progress in investment promotion in the past time. Some localities have proactively organised road shows and investment promotion conferences in both Vietnam and foreign countries. Many projects have been concluded at such events.

 

However, overlapping has occurred with investment promotion conferences and seminars. Besides, the competition in foreign investment attraction among provinces and cities resulted in ineffective investment promotion. For the time being, most foreign-invested projects are located in key economic zones and more developed localities.

In the last two years, the Ministry of Planning and Investment has not made investment promotion programmes for particular localities, but for regions. Provinces and localities with similar natural, economic and social conditions should work together to attract investment capital. This method helps companies to find partners and investors to determine locations to invest in. The ministry also submitted to the Government the report on investment promotion in 2012, which focuses on strengthening coherence between central and local levels. According to the ministry, an investment promotion conference of three days on average will not bring in high effect. Vietnam is an attractive destination for investors, especially when European countries are facing financial crisis and public debt problems. They are locating their investments to developing countries and Vietnam is a place of interest. But, to get the fruit and attain sustainable development, localities need interesting policies and favourable investment environment to attract long term investors.

 

By the end of December 2011, the value of FDI registered in Vietnam reached US$14.7 billion, equal to 74 percent in 2010. Fresh projects accounted for US$11.6 billion, down 35 percent from 2010. Compared with the target of US$20 billion set at the start of the year, this value did not meet expectations but offered promising prospects. The bright side was that 76.4 percent of FDI capital was channelled into industry and construction, much higher than 54.1 percent in 2010. All large-scale projects in 2011 were involved in the industrial sector, like the US$2.26 billion Jak Hai Duong power project, and the more than US$1 billion First Solar Cell project in Ho Chi Minh City. FDI capital for the real estate sector accounted for only 5.8 percent of the total registered capital in 2011, down from 34.3 percent in 2010. Meanwhile existing projects registered to add US$3.1 billion, an increase of 1.65 times over 2010 (with US$1.89 billion). This showed that foreign investors still pin high hopes on the investment environment in Vietnam.

 

In 2012, Vietnam aims to attract US$15 - 16 billion of FDI capital and expects foreign investors to disburse US$10 - 11 billion on their projects. FDI projects will be carefully selected and priority will only be given to important areas such as infrastructure, green and environmentally friendly technologies, especially technologies that provide new energy sources like solar energy and wind energy. In addition, Vietnam will concentrate on fields that create connection with other economic areas and regional links, supporting industries, sectors with competitive advantage, high technology, and human resources training. Non-manufacturing sectors that increase imports, use up resources and land, apply outdated technology and cause environmental pollution will be restricted. Vietnam does not encourage new investment projects producing iron and steel, but licensed projects will be continued.

 

Macroeconomic problems are common concerns of all nations and these indicators must be adjusted to suit the specific period. The Government gives priority to macroeconomic stability because it is vital for domestic production and the business operations of local and foreign enterprises in the country. Stabilising macro economy and improving the business environment are decisive factors to lure more foreign investment capital. All companies, whether Vietnamese or foreign, are affected by monetary policies and macroeconomic factors.

 

Foreign investors said Vietnam's success in foreign investment attraction is largely accrued from investors' expectations about economic and political stability. Foreign investors come to Vietnam to seek a margin on their business and production activities; thus, their greatest desire is to stay in a good land. Vietnam is also one of their many options; therefore, they will choose another one if Vietnam is not good enough, in their view. More than ever, decisions and policies must be explicit and clear, must be built on the basis of long-term vision, and must be implemented in a consistent way to regain the trust of investors, especially in the current context of fierce competition.

 

In 2012, problems of foreign investment as well as investment promotion activities will be gradually healed. This is an important foundation for foreign investment and investment promotion activities to continue to develop in the right direction, consistent with Vietnam’s objectives and development orientations.