China, the country attaining the highest economic growth in Asia, is now seen as Vietnam’s toughest rival and threat to the country’s foreign direct investment (FDI) attraction and labor-extensive exports, state media reported.
Instead of pouring into Asia’s emerging tiger of Vietnam, the FDI inflows have shifted to China, which posted the sharp increase in FDI of 9.4 per cent in 2004 and 2.9 per cent in the year 2000 compared to only 0.1 per cent and 0.25 per cent achieved by Vietnam in the same years, the Vietnam Economic Times quoted economist Pham Minh Ngoc August 7 as saying.
Dr. Ngoc also warned that Vietnam’s production and export sectors, especially the garment and textile and footwear industries are now facing greater pressures and tougher competitions imposed from China’s counterparts since the neighboring country officially joined WTO in 2001.
Ngoc doubted whether Vietnam’s processing industries shrink and if it hurts the country’s economic growth.
The FDI indexes released by the United Nations Conference on Trade and Development (UNCTAD) to assess FDI attraction in over 140 countries double reaffirmed Dr. Ngoc’s conclusion, saying Vietnam ranked 50th in terms of FDI inflows between 2002-2004. It slid to 51st in the 2000-2002 period from 36th in the 1998-2000, whilst China’s FDI is unceasingly improving, soaring to 51st, 50th and 45th, respectively.
To raise its competitive capacity of FDI attraction and technology transfer in the race against China, economist Ngoc proposed that the Vietnamese government pour more investments intensifying domestic scientific research and application to production and boosting technology transfer closely attached with FDI from other nations.
“There are now many things for Vietnam to do,” Ngoc noted, “to set up and strengthen relations between its Universities and businesses.”
The Vietnamese Government should also center on sectors boasting comparative advantages including cheap labor-extensive sectors and initially shift to the production of high-tech goods along with priorities given to skilled workforce, he said.
Vietnam’s market shares in the EU, America and Japan for textiles and garments as well as footwear over the past time are always behind China’s and India’s. Last year, Vietnam’s market share for textiles and garments in the US stood at 3.2 per cent while China held 25 per cent, according to Le Quoc An, Vitas chairman.
Vietnam expects to attract $6.5 billion of FDI this year whereas the figure of China is far higher.
However, Dr. Ngoc did disagree to some pessimistic analysts who voiced their deep concerns over thorny challenges and disadvantages awaiting Vietnam ahead. He also showed a firm optimistic stance about the bright future during the post-WTO accession if the government is to fulfill all the above-mentioned recommendations.
Vietnam Economic Times
Vietnamese
