Reduced FDI attraction
There has been no significant change from the US-China trade war as the hope that FDI capital would shift to Vietnam (including Quang Nam) has failed to materialize.
There is no shortage of mechanisms and policies; there are many promotions at forums, conferences, and international markets. However, the results of attracting FDI projects in the locality are still not as expected. The number of investors and FDI enterprises coming to Quang Nam has been on a downward trend in recent years.
According to statistics from the Department of Planning and Investment, in 2020, Quang Nam attracted 10 FDI projects, but in 2021, it only attracted 7 FDI projects with a total registered capital of about 15.2 million USD. The number of newly licensed FDI projects decreased by 30%, but the total registered capital decreased by 60%.
This decline is understandable. The COVID-19 pandemic and the social distancing that lasted for 2 years (2020 & 2021) made it impossible to connect with investment agencies, embassies of other countries or organize investment promotion and attraction activities.
However, it was quite a “surprise” that when the pandemic ended, attracting FDI investment could not be more positive, although there was no shortage of trade connection and promotion activities at international investment forums, conferences and seminars.
In 2022, only 5 FDI projects were attracted with a total registered capital of 68.24 million USD. In 2023, 4 more FDI projects were licensed with a total investment capital of 58.58 million USD, but 5 projects had to leave the market.
Signs of improvement can be seen in the first 9 months of 2024 when 8 FDI projects were licensed with a total registered capital of about 126.6 million USD, bringing the number of valid FDI projects to 199 projects with a total registered capital of about 6.2 billion USD.
According to the analysis of the Department of Finance, the economic recession caused by the pandemic, inflationary pressure, tight finance, and disrupted production supply chains... have led to investors limiting new investments or expanding investments to avoid risks.
Lack of wastewater treatment infrastructure in industrial parks and clusters under development; difficulties in compensation and site clearance have led to delays in investment in infrastructure in industrial parks and clusters, affecting the creation of land to attract foreign investors. Some legal regulations are still overlapping, unclear and not specific, also affecting the results of investment attraction.
In addition, according to Ms. Phan Thi Thanh Thao - Deputy Director of the Department of Finance, the application of the global minimum tax rate initiated by the Organization for Economic Cooperation and Development (OECD) also greatly affects the attraction of FDI capital flows.
Large businesses and corporations around the world are being cautious and considerate in choosing countries to invest in, including Vietnam.
Quality over quantity
FDI has always been considered one of the important engines of national or local growth. Therefore, it is not difficult to understand that FDI has now become a driving force to help the economy recover. How to stimulate this engine to operate faster, stronger, and more effectively is still a matter of discussion.
In an interview with Quang Nam Newspaper, Chairman of the Provincial People's Committee Le Van Dung admitted that FDI attraction has not met expectations. The inauguration of the factory by the German Karcher Group in July 2024 is one of the encouraging signs, but it is still not commensurate with the potential and advantages of the locality.
However, the investment space in Quang Nam is very open. Many investors have expressed their desire to survey and seek opportunities to invest in large, quality projects in the locality.
The names that were granted licenses and investment surveys were announced as: Cleaning equipment manufacturing factory (500 billion VND) of Karcher Beteiligungs - GMBH Company (Federal Republic of Germany), super white glass manufacturing factory (820 billion VND) of Uc Thinh Technical Development Company Limited (China), magnetic magnet factory (1,920 billion VND) of Star Group Industrial Company (Korea) or audio equipment manufacturing project (960 billion VND) of Guoguang Electric Company (China), paving the way for a new era of quality FDI projects.
Mr. Nguyen Hung - Deputy Director of the Department of Planning and Investment said that these are important projects, the concretization and realization of the planning will be a good signal for Quang Nam to attract more quality FDI investors.
According to Mr. Ho Quang Buu - Vice Chairman of the Provincial People's Committee, many foreign enterprises and large corporations are in need of investment in the locality. The Provincial People's Committee is reviewing and assessing the project to ensure that it meets all the conditions for investment licensing.
Attracting FDI among localities in the region is becoming an increasingly fierce competition. Quang Nam's viewpoint is not to wait for investors to come.
Localities will propose specific opportunity projects. Expand project absorption capacity with appropriate and favorable mechanisms and policies, proactively seek and hunt for investors and quality projects right at their headquarters.
“Attracting FDI will focus on quality rather than quantity. The government will cooperate with leading enterprises, proactively propose strong enough opportunity projects, identify investors with financial and technological capacity, through appraisal by specialized agencies, send people to directly meet and find real investors.
Investment projects create growth and revenue but must ensure the environment with advanced technology. Quang Nam is ready to eliminate projects using outdated technology, which can cause environmental pollution or affect national defense and security," said Mr. Buu.
FDI project quality control
The role of FDI cannot be denied, but the consequences are not small if looking at the reality of local investment.
Looking at the budget contributions of FDI enterprises, it is difficult to say that this is one of the pillars of the economy. Mr. Dang Phong - Director of the Department of Finance once shared that the province has nearly 200 FDI enterprises, but the annual contribution of only 1,200 billion VND is too small a number.
This business sector uses too much local resources, but the number of businesses with accumulated losses has always increased over the years. The contribution to the budget and the economy is not commensurate with the local resources allocated to FDI enterprises.
Dr. Tran Dinh Thien (economic expert) believes that FDI mainly plays a role as a tool to implement the growth model, aiming at GDP growth rate, not prioritizing the strategy of improving growth quality, enhancing the technological level of the Vietnamese economy and enterprises. Have you ever been surprised when FDI enterprises continuously declare losses, but few FDI investors leave?
The history of attracting local investment has always shown that FDI is still an irresistible attraction, leading to chasing quantity, thus "making it difficult for oneself" by offering too attractive investment incentives. The investment management agency confirmed that it is difficult to have specific statistics on the number of projects that are slow or have not yet disbursed and the capital implemented in investment projects is rarely mentioned.
Management agencies easily examine projects and investors' financial capacity, and easily grant licenses. As a result, some projects cannot be implemented because investors do not have enough capacity, and land is stuck in virtual projects for many years. As a result, the profits brought to localities from FDI are not commensurate with the value of the permanent resources lost.
Choosing a path to attract FDI with a focus on quality is important. But it is important to answer the question: if in the future, foreign investors withdraw from the country for some reason - something that is entirely possible - will Quang Nam be able to maintain the operations of these facilities at a certain level to continue to keep jobs for workers and ensure social stability?
The history of attracting investment has proven that capital, market, and technology transfer as expected have not happened. FDI has only stopped at the level of providing labor for low-cost processing activities and mainly leasing premises.
Quang Nam still needs resources from foreign investment. However, the government needs to control the quality of enterprises, not only to meet the requirements in attracting but also to eliminate FDI enterprises that do not meet investment requirements...
HEART SONG
Source: https://baoquangnam.vn/thu-hut-fdi-quang-nam-huong-ve-chat-luong-3141741.html
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