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| VSIP Bac Ninh Industrial Park. (Source: Vietnam Housing) |
The FDI sector contributes to creating jobs, increasing income for workers, diversifying production structures, spreading technology and modern management experience, and helping Vietnam participate in many stages of the global value-added chain.
Bright spot of the economy
According to the Foreign Investment Agency (Ministry of Planning and Investment), as of October 31, total FDI capital in Vietnam reached nearly 27.26 billion USD, up 1.9% over the same period in 2023. Regarding implemented capital, projects are estimated to have disbursed about 19.58 billion USD, up 8.8% over the same period in 2023.
Investors have poured capital into 18/21 national economic sectors. 106 countries and territories have invested in Vietnam, of which Singapore leads with more than 7.79 billion USD, China ranks second (3.61 billion USD), followed by Korea, Japan...
Investment capital is concentrated in provinces and cities with many advantages (good infrastructure, stable human resources, efforts to reform administrative procedures and dynamism in investment promotion...) such as Bac Ninh, Ho Chi Minh City, Quang Ninh, Hai Phong, Ba Ria - Vung Tau, Binh Duong, Hanoi, Dong Nai, Bac Giang, Ninh Thuan...
According to the Foreign Investment Agency, for nearly four decades (1986-2022), Vietnam has been considered a successful model in attracting FDI thanks to its attractive investment environment, stable political foundation and high economic growth potential. Cumulatively from 1986-2022, Vietnam has attracted nearly 438.7 billion USD in FDI capital. Notably, after the Covid-19 pandemic, in 2023, registered FDI capital in Vietnam reached 36.61 billion USD (an increase of 32.1% compared to 2022, while global FDI increased by only 3%).
Assessing the contributions of FDI capital to Vietnam's economy, experts said that this sector is not only an important pillar for economic development but also a driving force for reform, innovation and enhancing our country's competitiveness in the context of globalization.
Speaking with The Gioi and Viet Nam Newspaper, Master Nguyen Tran Minh Tri, Institute of World Economics and Politics, Vietnam Academy of Social Sciences, said that the contributions of the FDI sector have created foundations to promote the process of economic restructuring, promote foreign economic relations, and enhance Vietnam's national competitiveness over the past years. This sector currently creates jobs for about 5 million direct workers and tens of millions of indirect workers with wages and incomes about 20-30% higher than the national average, 22-24% of social investment capital, 55% of industrial output, more than 70% of export turnover, 20% of budget revenue and 18% of GDP.
Be careful "the benefits do not outweigh the harm"
According to experts at the scientific workshop “New approaches and development orientations for the foreign-invested economic sector in Vietnam’s socialist-oriented market economy” recently organized by the Central Economic Committee, attracting FDI in Vietnam still faces many challenges that need to be resolved, requiring more effective strategies and policies to improve the situation. Besides the positive contributions of FDI to the Vietnamese economy, experts still warn about the “disadvantages outweighing the benefits” in attracting this source of capital.
Specifically, in terms of technology and management, Vietnam has not really acquired much management skills and has almost not received the impact of technology transfer from FDI projects. Some FDI enterprises invest in Vietnam only to take advantage of cheap labor and preferential investment policies.
Associate Professor, Dr. Nguyen Mai, Chairman of the Association of Foreign Investment Enterprises, commented that in terms of benefits - an important criterion in FDI investment activities, Vietnam is still at a disadvantage because foreign investors transfer "huge profits" back to their countries. The situation of FDI enterprises reporting losses or operating inefficiently is not too rare. If in 2017, this rate was 37.91%, then in 2021 it was 47.09%, in 2022 it was 56%.
In addition, the policies to attract and give incentives to the FDI sector in some localities are unreasonable, do not focus on key industries or do not target the stages that create high added value. Therefore, to improve the quality of FDI capital flows, it is time for Vietnam to have the right to choose, to say “no” to projects that do not meet requirements, and are not suitable for the country's socio-economic development orientation.
This is also a way to create development space for domestic enterprises. When they no longer have to compete with foreign "giants", Vietnamese enterprises will have the opportunity to develop, improve their competitiveness, and contribute more to the economy, analyzed Professor Nguyen Thi Xuan Thuy, Lecturer of the Faculty of Political Economy (University of Economics - Vietnam National University, Hanoi).
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| Vietnam tops the list of 10 countries with the fastest improving business environment in the past 20 years. (Source: VnEconomy) |
Change for the better
MSc. Nguyen Tran Minh Tri commented that, regarding the orientation of perfecting institutions and policies, improving the quality and effectiveness of foreign investment cooperation until 2030, the Politburo issued Resolution No. 50-NQ/TW. To specify this Resolution, on June 2, 2022, the Prime Minister approved the Foreign Investment Cooperation Strategy for the period 2021-2030.
The strategy clearly states that Vietnam will focus on attracting FDI with a focus and key points; attracting projects using advanced technology, new technology, high technology of the Fourth Industrial Revolution, modern management, high added value, connecting global production and supply chains; attracting green investment, high technology, supporting technology; promoting social responsibility and environmental protection... "That is, to promote socio-economic development, Vietnam must continue to increase the scale and speed of attracting FDI investment to promote the role of creating momentum to promote GDP growth and build a green economy," said Mr. Tri.
This is completely reasonable as Vietnam continues to be a destination for foreign investors. Trending Topics on October 15 cited the latest report from the Economist Intelligence Unit - EIU (UK) ranking Vietnam at the top of the list of 10 countries with the fastest improving business environment in the past 20 years, continuing to affirm its position as an attractive destination for international investors.
Last October, Bloomberg (USA) published an article stating that Vietnam is cleverly taking advantage of the trend of shifting production to promote high-tech FDI capital flows. To do this better, the news agency recommended that Vietnam should focus on building internal strengths such as: improving the skills of the workforce, improving infrastructure and diversifying the economy to move up the value chain. Vietnam can also start by demanding more contributions from large technology corporations.
At the above workshop, Prof. Nguyen Thi Xuan Thuy proposed that Vietnam should develop a set of FDI indexes to maximize the benefits from attracting FDI, thereby creating a database for policy advisory agencies to assess the impact of FDI capital on the economy. At the same time, it is necessary to change the investment attraction strategy, shifting from pre-investment incentives to post-investment incentives combined with investor diversification, avoiding over-reliance on a few large investors.
In addition, the solutions that have been mentioned many times are to focus on removing difficulties and obstacles for land projects; promoting investment resources of the economy, promoting new growth drivers such as: innovation, digital economy, green economy, new industries...
Recently, the international press has made many positive assessments and forecasts about Vietnam's economic development, stating that Vietnam has returned to being a growth star in ASEAN, with a forecast GDP of 7% in 2024, with the potential to develop into an important factor in the global semiconductor value chain, and Vietnam is at the top of the list of 10 countries with the fastest improving business environment. And, in the current context, it is time for Vietnam to be selective in attracting FDI so that capital can truly contribute to the country's development in the era of national development.
Source: https://baoquocte.vn/fdi-dong-luc-phat-trien-trong-ky-nguyen-moi-293752.html
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