Vietnam is in need of a next-generation FDI strategy, focusing on attracting high tech and environmental-friendly foreign projects, for sustainable development and enabling local enterprises to better integrate in the global supply chain, according to Deputy Prime Minister Vuong Dinh Hue.
Deputy Prime Minister Vuong Dinh Hue at the meeting. Source: VGP.
Vietnam’s priority is to attract projects using cutting-edge technologies and highly qualified labor force, while considering the high added value of the project as criteria for license granting instead of the amount of investment capital, Hue said in a meeting discussing foreign investment policies in the new context on February 14.
The meeting is part of the process to draft a new FDI strategy for 2020 – 2030, which would be submitted to the Politburo, the supreme decision-making body in the country, for consideration by April 2019.
In the coming time, Hue expected Vietnam to improve its business and investment environments, meeting requirements for the development of a digital economy for the benefit of all economic components and having specific policies to enhance the linkage between the FDI and domestic sectors.
Vietnam’s government remains steadfast on attracting foreign investment for economic development, Hue stressed.
At the meeting, Deputy Minister of Planning and Investment Vu Dai Thang informed that as of January 20, 2019, Vietnam had 27,463 valid FDI projects with registered capital of US$343 billion.
So far, the disbursement rate has reached US$192 billion, while the FDI accounted for 18 – 25% of total social investment during the 1991 – 2018 period, Thang added.
Moreover, the FDI has played a key role in Vietnam achieving its socioeconomic development targets, in turn facilitating the shift and mobility of professions and trades in society. A report by the United Nations Conference on Trade and Development (UNCTAD) released in 2017 stated that Vietnam was among top 12 most successfully countries in attracting FDI.
Vice Chairman of Ho Chi Minh City People’s Committee Le Thanh Liem said after 30 years of opening-up, FDI has been an essential part in nourishing the city’s private business community. As of present, FDI investment capital is equivalent to one fourth of the private sector in Ho Chi Minh City, growing 7.45-fold compared to the 33-fold of the domestic sector during the period.
Liem added that the growing trend of merger and acquisition (M&A) activities between FDI enterprises have brought positive impact on the employment restructuring in the city.
According to Liem, a number of local enterprises in the field of property development has now been capable of competing with FDI enterprises.
Kyle Kelhofer, IFC country manager for Vietnam, Cambodia and Laos, said most FDI projects in Vietnam are mainly focusing on manufacturing, which should be shifted to high added value sectors, such as finance, research and development (R&D), among others.
In the new context, Vietnam’ current advantages of attracting FDI would be gradually diminished, requiring new approaches for next generation FDI attraction with better corporate governance, high skill labor force, and better quality standards, Kelhofer stated.
Kelhofer recommended that Vietnam should ensure efficient operation of FDI enterprises and the utilization of free trade agreements.
Sharing the same view, Young-sup Joo, former Minister of Small- and Medium-Sized Enterprises and Startups of South Korea, said Vietnam should focus on attracting FDI in the R&D field.
Joo expected Vietnamese enterprises to soon become partners, instead of “contractors” for FDI enterprises in various fields, aiming for regional and global markets.