Vietnam racks its brain to optimise FDI’s benefits

Under the plan to attract FDI by 2020 being compiled by the Ministry of Planning and Investment (MPI), Vietnam would attach much importance to the structure and FDI quality by attracting the projects with low carbon content, modern technologies. One of the most important goals for FDI encouragement is to develop high quality labour force, skilful workers, encourage foreign enterprises to reinforce their cooperation with domestic businesses to increase the Vietnamese value in the value chain.

"What we need to do is to optimise the benefits of the FDI capital flow,” said an official of MPI, who is also a member of the compilation committee. 

However, Mai Thu, director of the National Socio-Economic Information and Forecasting Centre, who has many-year experiences in FDI management, said there is still a big gap between the "desire” and the "reality.” 

"We want to attract advanced technologies and we want high-tech projects to allocate reasonable budgets for research and development work. However, we still do not know how advanced the technologies should be,” Thu said. 

"We still have not agreed about if advanced technologies and appropriate investments in R&D should be the requirement on all FDI projects, or these would be applied only to some businesses fields,” she added. 

Do Nhat Hoang, Head of the Foreign Investment Agency, an arm of MPI, said though Vietnam has had the development strategies for every branch and every industry already, it would be still difficult to carry out the strategies in reality. 

"There always exists the gap between what we need and what investors want,” Hoang said, adding that it is very difficult to find out a "common denominator” what can satisfy the requirements of both investors and the government. 

Experts have warned that Vietnam would have to exchange something for the FDI development on the right desired track. 

It may happen that the FDI capital flow to Vietnam would decrease in the immediate time, when Vietnam becomes choosier in attracting foreign investment. 

The FDI encouragement strategy compilation board has warned that with the FDI capital decline, the industrial production value, the export turnover decreases prove to be inevitable. Especially, the FDI projects using modern technologies and huge investment capital would not employ many workers, which could be a problem to the employment rate. 

Thu has agreed that if Vietnam strives to higher quality FDI, it would have to sacrifice many things in short term. If Vietnam welcomes big and high quality FDI projects, it would have to see the number of FDI projects decreasing. 

"This would influence the total investment capital of the whole society, to the GDP growth and employment,” Thu said. "However, we have to accept all the challenges.” 

In the first eight months of the year, Vietnam attracted 8.47 billion dollars worth of FDI, including the newly registered capital and the additional capital for currently operational projects. The figure represented the 33.9 percent decrease in comparison with the same period of 2011. 

The sharp fall of FDI capital has raised big worries about the investment environment in Vietnam. However, MPI has reassured the public that FDI decreases in short term, but would bounce back in long term