Business
Transfer of technology from FDI enterprises remains modest
Despite vast contribution to Vietnam’s economy, the rate of technology transfer from foreign direct investment (FDI) firms remains low.
That was stated in a seminar jointly held by Ministries of Ministry of Planning and Investment (MPI), and Labor, Invalids and Social Affairs (MoLISA) on June 19.
At the event, Dr. Le Van Hung from the Vietnam Institute of Economics said that Vietnam’s labor productivity has gradually improved, with its growth achieving 5.5% on average in the 2014-2016 period. Among economic components, the FDI sector remains at the top in terms of productivity in comparison with the public sector, and especially the informal sector.
The main reason behind this gap, according to Hung, is that the FDI sector focuses mainly on processing industry while the domestic sector concentrates on agriculture and non-official industry, whose labor productivity stands low.
Hung also pointed out shortcomings in the FDI sector, saying that foreign firms have yet to establish close links with Vietnamese peers to jointly participate in value chains and promote the development of support industries in Vietnam.
The transfer of technology and management experience has not met expectations, he noted, adding that there persist phenomena such as transfer pricing, tax evasion or violations of regulations on environmental protection.
To improve the efficiency of labor productivity in FDI firms, Vietnam needs to pay attention to the quality of FDI flows instead of quantity, Hung said.
Meanwhile, Vu Dai Thang, Deputy Minister of Planning and Investment stressed the need to review and evaluate the overall situation of labor in the FDI sector in recent time, thus drawing out appropriate and breakthrough solutions to improve the quality of human resources in FDI firms.
After 30 years implementing the Law on Foreign Investment in Vietnam, the FDI sector has become a vital part of the national economy. As of May 2018, Vietnam attracted 25,691 FDI projects with total registered capital of nearly US$323 billion. Present in 63 localities across the country, the sector has contributed largely to the global integration, state budget and vast export volume as well as competitiveness pressure of Vietnam.
Amid the strongly developing Industry 4.0 and fierce competition in attracting FDI, Vietnam has set the target of shifting FDI attraction from quantity to quality, gradually moving towards high quality resources instead of attracting FDI in sectors with cheap labor costs, according to the Vietnamese official.
“Therefore, it is necessary to review the current situation of labor in FDI enterprises in order to propose solutions to improve labor quality and efficiency, optimizing the efficiency of the world's FDI flows which are tending to pour into Asia, including Vietnam”, Thang recommended.
Besides, Ngo Duy Hieu, Head of Labor Relation Department under the Vietnam General Confederation of Labor, touch on an increasingly situation that some FDI firms “fired” employees aged over 35 due to the nature of some jobs. Meanwhile, other enterprises “hesitate” to pay higher salary and insurance money for senior employees who are unable to meet the job requirements.
“A large number of middle-aged unemployed laborers can create social instabilities,” Hieu stressed. Regarding this matter, he proposed government issue broader regulations on insurance to ensure the legitimate rights of employees.
A view of the seminar
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The main reason behind this gap, according to Hung, is that the FDI sector focuses mainly on processing industry while the domestic sector concentrates on agriculture and non-official industry, whose labor productivity stands low.
Hung also pointed out shortcomings in the FDI sector, saying that foreign firms have yet to establish close links with Vietnamese peers to jointly participate in value chains and promote the development of support industries in Vietnam.
The transfer of technology and management experience has not met expectations, he noted, adding that there persist phenomena such as transfer pricing, tax evasion or violations of regulations on environmental protection.
To improve the efficiency of labor productivity in FDI firms, Vietnam needs to pay attention to the quality of FDI flows instead of quantity, Hung said.
Meanwhile, Vu Dai Thang, Deputy Minister of Planning and Investment stressed the need to review and evaluate the overall situation of labor in the FDI sector in recent time, thus drawing out appropriate and breakthrough solutions to improve the quality of human resources in FDI firms.
After 30 years implementing the Law on Foreign Investment in Vietnam, the FDI sector has become a vital part of the national economy. As of May 2018, Vietnam attracted 25,691 FDI projects with total registered capital of nearly US$323 billion. Present in 63 localities across the country, the sector has contributed largely to the global integration, state budget and vast export volume as well as competitiveness pressure of Vietnam.
Amid the strongly developing Industry 4.0 and fierce competition in attracting FDI, Vietnam has set the target of shifting FDI attraction from quantity to quality, gradually moving towards high quality resources instead of attracting FDI in sectors with cheap labor costs, according to the Vietnamese official.
“Therefore, it is necessary to review the current situation of labor in FDI enterprises in order to propose solutions to improve labor quality and efficiency, optimizing the efficiency of the world's FDI flows which are tending to pour into Asia, including Vietnam”, Thang recommended.
Besides, Ngo Duy Hieu, Head of Labor Relation Department under the Vietnam General Confederation of Labor, touch on an increasingly situation that some FDI firms “fired” employees aged over 35 due to the nature of some jobs. Meanwhile, other enterprises “hesitate” to pay higher salary and insurance money for senior employees who are unable to meet the job requirements.
“A large number of middle-aged unemployed laborers can create social instabilities,” Hieu stressed. Regarding this matter, he proposed government issue broader regulations on insurance to ensure the legitimate rights of employees.
