In 2013 Vietnam lured more than US$20 billion in FDI - a desirable figure to many developing countries in the context of the global economic slowdown. However, many economists are not impressed with this new record, arguing the quality of FDI is the crucial factor.
They say since the Foreign Investment Law was first introduced in 1987, Vietnam has only marginally improved upon its managerial skills and has not reaped major benefits from the transfer of technology from FDI projects as expected, and this is a matter of particular concern.
During the past 20 years, big international giants such as Intel, Samsung, Nokia, Toyota, Mercedes, and Coca Cola, have entered Vietnam to explore and cash in on this emerging market.
In the 1990s many Vietnamese localities rolled out the red carpet to welcome foreign investors as special guests, offering numerous preferential tax and other incentives. As a result, FDI inflows into Vietnam increased year on year.
Also during that time, foreign giants earned huge profits which were then remitted to their countries. Meanwhile, many Vietnamese localities began to pay a steep price for their decision, in which addressing environmental problems is one of common examples.
In turn, investment recipients, including Vietnam, all expect to acquire advanced managerial skills and technology from foreign investors to create a competitive environment for domestic businesses.
Vietnam has licensed many big projects specialising in electronics, automobile and motorcycle manufacturing, but domestic support industries are still in their infancy.
