Aug 08, 2019 / 13:56

Smaller FDI projects pose risk of outdated technologies

The average investment capital of fresh projects in 2017 reached US$13.8 million per project, then decreased to US$5.87 million in 2018 and US$4 million in the first seven months of 2019, according to the Ministry of Planning and Investment (MPI).

The size of FDI projects in Vietnam is getting smaller with a growing number of those worth just US$1 million, posing risks of outdated technologies being imported to the country, according to Nguyen Bich Lam, head of the General Statistics Office (GSO). 
 
Illustrative photo.
Illustrative photo.
This puts Vietnam at a situation of having to screen the quality of projects and not attracting investment at all costs, Lam stated. 

FDI commitments in the January – July period totaled US$20.2 billion, including both newly registered capital and capital contributed by foreign investors through stake acquisitions, down 13.45% year-on-year.

During the period, 2,064 fresh projects were approved with total commitments of US$8.27 billion, down 37.4% year-on-year.

According to the Ministry of Planning and Investment (MPI), the average investment capital of fresh projects in 2017 reached US$13.8 million per project, then decreased to US$5.87 million in 2018 and US$4 million in the first seven months of 2019, indicating that FDI projects to Vietnam are smaller compared to previous periods.

In addition to new projects, the number of existing projects having been injected additional capital or contributed capital by foreign investors is also on the decline. 

In 2018, the additional capital committed to projects in Vietnam stood at US$6.4 million per project on average, and down to US$4.22 million in the January – July period. 

Out of 63 provinces, Bac Ninh has the largest number of new FDI projects with 46 to date, including 25 from Chinese investors. 

Most of them are in the supporting industries for major production chains, such as Samsung, revealed a representative of the management board of Bac Ninh Industrial Park, adding that the majority has investment capital around hundreds of thousands of USD, with some at only US$100,000. 

Clear regulation required to filter FDI projects

Nguyen Van Toan, vice president of the Vietnam Association of Foreign Invested Enterprises (VAFIE), told Tien Phong newspaper that with the current legislation, it would be difficult to screen the FDI projects, as the process requires specific regulations. 

As of present, Vietnam does not have clear a definition of advanced or source technologies, as well as priority levels for each projects. Under this context, provinces and cities are approving projects mainly based on the credibility of the investors, not on the project itself, Toan added. 

Toan suggested the government agencies set up criteria to determine advanced and source technologies, along with policies for business and production activities. 

FDI filter system is instrumental for Vietnam to acquire high technologies and train quality human resources, Toan concluded.