In 2019, FDI has witnessed many great changes, creating a bright segment for the economic picture. Therefore, according to Prof. Dr. Sc. Nguyen Mai (pictured), Chairman of the Association of Foreign Investment Enterprises (VAFIE), the new orientation this time in attracting FDI is to focus onquality and not tolerate projects of any industry, partners, localities, to help the economy develop quickly and sustainably.
How do you assess the situation of FDI attraction in Vietnam?
Attracting FDI was a bright part of the economic picture in 2019. The distribution of FDI capital into economic sectors continues to hold the same proportion as in previous years, including some positive changes to the economy due to the expansion of markets. The domestic enterprises have a stronger potential, so a number of foreign investors have linked to transfer new technologies and new business methods to domestic enterprises.In addition, M&A activities have also become active in recent years, accounting for an increasing proportion of the total registered capital. That is a good sign for two main reasons: the size of domestic enterprises has grown, creating an abundant supply for M&A and the open policy of the stock market under the policy of loosening room for foreign investors.
However, the quality and effectiveness of FDI in 2019 did not meet the country's requirements in the process of shifting towards innovation, creativity, science, technology and high-quality human resources, building the digital economy, joining the Fourth Industrial Revolution. The average size of each FDI project is too small, lackinglarge-scale projects. Each project has only about $4.3 million inregistered capital. Some localities also attract projects of $1-2 million, even less than $1 million.
How do you forecast FDI attraction in Vietnam?
Vietnam has been highly appreciated by the foreign investor community and international organizations about the business and investment environment.Some new generation FTAs have been ratified and come into effect, so the prospect of FDI attraction in 2020 is very bright. Investment from Japan, Korea, Singapore and Asia is still increasing. Investment from the US, Germany, France, the United Kingdom and some other European countries in modern technology, education and training, research and development with many large projects will also increase.
In addition, the number of small and medium-sized foreign enterprises investing in Vietnam will continue to grow in labor-intensive industries, hi-tech agriculture, organic agriculture and consulting services.Many of the world's leading economic groups invest billions of dollars in high-tech industry, technology, smart city building, and technical and social infrastructure. FDI projects in localities are attracted in accordance with the development level of each province and city with preferential policies that are suitable to the list of priority projects calling for investment.
In particular, there are currently many investors in the US, Europe and Asia moving projects and production facilities from China to their country or to a third country. Vietnam is the top choice, so a number of factories have moved from China to our country. Therefore, Vietnam needs to research to identify new challenges and opportunities, giving appropriate policies for Chinese enterprises in the direction of selecting, screening, and guaranteeing national interests in trade cooperation and investment between the two countries.
With the development mentioned above, what changes must we make to attract FDI in the direction of quality as stated in the Politburo's Resolution 50-NQ / TW, sir?
Quality objectives require changes in thinking and action in selecting partners and FDI projects. We must select to involve technology transfer, corporate governance, and training of quality human resources, joining global supply chains. These are the disadvantages of thirty years of FDI attraction in our country that have been discussed a lot, but are slowly overcome. Therefore, the new orientation for medium and long-term FDI must take quality, not tolerate projects of any industries, partners or localities, which must be set in the context of our country pursuing a growth strategy with high speed towards a green and sustainable economy.
Moreover, in addition to what is being done such as completing the legal system and reforming administrative procedures, it is necessary to create an attractive and proactive investment environment in selecting projects and investors. Therefore, a new approach is needed in reforming the national administration towards building an e-government to achieve the goals set out in the Politburo's Resolution 50.
In particular, we need to be more rigorous in selecting investors. In the economic development plan of each sector and locality, the competent agencies must elaborate the plan on the objectives, investment capital, investment modes and conditions that have been available for transportation, telecommunications, energy, water supply and drainage, on-site and trainable personnel, tax, land rental, export and consumption preferences in the domestic market; legal advisory service organizations, project planning, dealing with government agencies and contacts to get more information about the project. When they aredone, FDI will become a part of the national economy, overcoming the common phenomenon that local leaders are passive and easily accept high-value investment projects, without regarding quality and efficiency.
Thank you Sir!
Source: VCN
Key words: attracting, FDI, quality, important
