FDI Attraction Policy Needs Radical Revamp

10:10:29 AM | 5/5/2021

The FDI attraction policy must be proactive with a strong focus placed on quality, effectiveness, technology and environmental protection.

Addressing the Connections for Development Forum 2021 themed “Seizing new opportunities for localities and businesses”, Mr. Bui Thanh Son, Minister of Foreign Affairs, expected to see Vietnam’s FDI attraction policy strongly reformed in the coming time to make good use of opportunities and promote local advantages.

Specifically, Foreign Minister Son said, attracting foreign direct investment (FDI) for socio-economic development, national industrialization and modernization is part of the consistent Party and State doi moi (renewal) policy.

With this approach, Vietnam has endeavored to improve the business investment environment and offer many preference treatments for foreign investors. As a result, the FDI sector has grown rapidly to become an important part of Vietnam's economy and create a driving force for economic restructuring toward industrialization, modernization and deep integration into the world economy.

Contributions of the FDI sector are valuable

Currently, the FDI sector accounts for 20% of GDP, over 50% of industrial production value and about 70% of export value of the country, and generates millions of jobs. Many world-leading corporations are making long-term investments and reaping success in Vietnam.

Even when the world and Vietnamese economy were very negatively affected by the COVID-19 pandemic, FDI flows into Vietnam remained very positive, reflecting international investor confidence in Vietnam as a safe and attractive destination.

Minister Son highly appreciated the respectful role and contribution of the FDI sector, but FDI attraction and management in Vietnam is still weak.

High-tech FDI projects are limited in number. Their coherence with domestic economic sectors is lax and their spillover effects on productivity and technology are limited. Many FDI projects are ineffective, unsustainable, and noncompliant with policies and laws on investment, finance, labor, technology, and environment.

In addition, the strong evolution of the Fourth Industrial Revolution has posed many problems and challenges to FDI attraction, especially impacts of artificial intelligence, automation and smart production.

Mobilization and effective use of all resources

Vietnam is entering a new stage of development, aiming to become a middle-income industrial country by 2030 and a high-income developed country by 2045.

To achieve these goals, Vietnam must grow rapidly and sustainably, expected at 6.5-7% annually in the next 10-20 years, according to Foreign Minister Son. "To do so, one prerequisite is mobilizing and using all domestic and international resources for development effectively where the FDI sector continues to play an important role,” he emphasized.

Vietnam’s FDI attraction achievements over the past 35 years are valuable lessons, showing a flexible and creative approach, effective capture of opportunities and promotion of its own advantages is key for Vietnam to keep advancing.

The FDI attraction policy in the coming time must shift to active thinking and selective licensing and use quality, efficiency, technology and environmental protection as top criteria, he added.

According to many international organizations, after 35 years of doi moi, Vietnam is a success story for escaping underdevelopment. In order to continue to grow rapidly and sustainably in the coming years, Vietnam needs to promote strong development momentum, ranging from improvement of market economy institutions, from a young, dynamic and creative human resource with high entrepreneurship, from encouraging innovations and digital transformation of the nation, from vigorous development of the private economy, from the strength of the domestic market entering the threshold of income booming consumption, from deep international integration with an extensive FTA network with more than 60 economies around the world.

"We believe that localities, domestic and international enterprises will seize great opportunities from unlocking these development dynamics to extend robust growth," Foreign Minister Son said.

Continued capture of opportunities

For many years, economic diplomacy for socio-economic development has been a pillar of the foreign affairs sector. The diplomatic sector has defined supporting localities and enterprises as a central and regular task.

Promoting a network of nearly 100 representative agencies across the continents, the foreign affairs sector has actively fostered connections between localities and domestic businesses with international businesses and partners, with many practical and effective activities.

In the coming time, the Ministry of Foreign Affairs pledges to continue to work closely with ministries and agencies, accompany localities and businesses, actively and effectively supporting the successful implementation of socioeconomic development targets.

At the same time, in the period of extensive and comprehensive integration of the country, the diplomatic sector will play a leading role in connecting localities and businesses with development megatrends of the world, and seize opportunities to fulfill the country's aspirations for prosperity.

Through the Connections for Development Forum 2021, Minister Bui Thanh Son hoped that localities, domestic enterprises and foreign investors will openly exchange each other's needs, potential and advantages to, on that basis, identify new investment opportunities, have plans and measures to boost cooperation for the sake of localities and businesses, and also for the general development of the country.

Source: Vietnam Business Forum