Viet Nam would continue encouraging foreign investments in the long term, with focus on high-tech projects and modern governance in a move to expand export markets, join global supply chains and enhance competitiveness.

Deputy Minister of Planning and Investment Vu Dai Thang made the statement at a conference titled ‘Future outlook of FDI attraction and implementation’ held in the northern province of Vinh Phuc on Friday.

According to Thang, after three decades, FDI has become an important part of Viet Nam’s economy. As of November 2018, the country was home to some 27,000 FDI projects worth nearly US$340 billion of registered capital and $188.8 billion of disbursed capital of investors from 128 countries and territories. Up to 57 per cent of the total was invested in industry.

FDI was an important source of the country’s total social development investment capital as its proportion increased from 15 per cent in 2005 to 23.7 per cent in 2017, Thang said, adding the resource had been also the driving force of the country’s economic growth in recent years.

“The growth rate of FDI firms reached 12.6 per cent in 2017, the highest in all economic sectors. The force contributed 27.7 per cent to the country’s economic growth in the 2010-17 period, compared with 15 per cent in the 1986-1996 period,” Thang said.

In addition, FDI has also contributed to promoting the country’s economic restructuring and forming some key industries of the economy such as telecommunications, petroleum, electronics and information technology.

Besides, he said, FDI has also made an important contribution to the country’s export growth in recent years.

Since 2010, the export growth rate and export turnover of FDI firms have been two to three times and 1.5-2 times higher than that of Vietnamese firms, respectively. The export value of FDI accounted for 72.5 per cent of the country’s total export revenue in 2017, surging sharply against 17 per cent in 1995.

However, according to Thang, there remain shortcomings in FDI attraction in the country, such as a poor spillover effects and low tech transfer rate between FDI firms to local peers.

Comprehensive reforms

To better lure and use FDI resource in the time to come, Thang suggested it was necessary to have unified awareness and actions to implement orientations and policies on foreign investment.

Besides, streamlining legal institutions and policies as well as improving the business investment environment in line with the market standards and international rules are important prerequisites for attracting and using foreign investment effectively, according to Thang.

Besides encouraging and supporting the joint venture, cooperation and technology transfer between domestic and FDI firms, it is also necessary to develop skilled human resources to reposition Viet Nam’s competitive edge in attracting foreign investment.

Meanwhile, Deputy Prime Minister Trinh Dinh Dung asked localities to better prepare the construction planning and focus on infrastructure development to lure foreign investment.

Dung also urged local authorities to accelerate the reform of administrative procedures, invest in developing human resources for industrial development and strengthen supporting industries.

The Deputy PM also hoped foreign investors would implement their projects in accordance with their commitments and Viet Nam’s laws while paying attention to the research and development as well as investment of new technologies and cooperate with Vietnamese enterprises to develop supporting industries.

Foreign participants also mentioned the development of skilled human resources and promote the supporting industries.

Tetsu Funayama, head of the Business Forum Committee of the Japan Business Association in Vietnam, said 65 per cent of Japanese enterprises now chose Viet Nam as their investment destination in Southeast Asia and their interest when investing here was the country’s policy to develop supporting industries.

Viet Nam and Japan needed to expand cooperation to train Vietnamese experts, engineers and technical staffs to improve the country’s human resources, Funayama suggested, adding there should be also policies to promote supporting industries, enabling Japanese enterprises to invest in Viet Nam.

A representative from the Korea Chamber of Business in Vietnam also said one of the barriers hindering the technology transfer between FDI and Vietnamese enterprises was the lack of human resources and science and technology.

The representative expected Viet Nam to standardise its technical training programmes to grant certificates for Vietnamese engineers and workers so that FDI firms can use the employees when they invest in the country, avoiding waste of time and money for the training.

In addition, he said foreign firms expected to get preferential tax policies as well as simplified, transparent and clear administrative procedures when investing in the country. — VNS