Foreign invested enterprises (FIEs) are paying more heed to distributionand importing than actually producing anything locally.
Thisis because they enjoy many incentives from reductions in import tariffreductions – sometimes down to zero – and other preferential policiesafter the country joined the World Trade Organisation (WTO).
Industryinsiders said that production, which create more jobs for locallabourers and transfer vital technology, cost more for FIEs to establishthan the commercial field.
Now, instead of pouring moneyinto Vietnam for production, FIEs tend to operate as traders only byimporting goods from their countries and then selling them in Vietnam. Consequently, domestic industries are becoming more dependent onforeign countries.
According to the Hai Quan (Customs)newspaper, nearly 20 years ago, the Japan-based Sony company began itsinvestment in Vietnam with only one assembly line and about 200local workers.
In 2008, the company announced that itdecided to halt operations in the country, meaning that it was notplanning to invest any more money for production. However, Sony-brandedproducts still sell like hot cakes.
Many other huge foreigncorporations have been establishing distribution networks instead ofinvesting more money in production.
Deputy Minister ofIndustry and Trade Nguyen Thanh Bien said that the new FIE trend willaffect adversely the country's inflation and trade deficit, and preventit from building a healthy industrial atmosphere.
Arepresentative of Vinaxuki JSC said that it is now unlikely that adomestic auto industry will be created, adding that the number of autoand motorbike producers has been squeezed down to 10 from 70 companiesin the past.
He said this proves that FIEs tend to switch from production to distribution and importing.
Accordingto the Foreign Investment Agency under the Ministry of Planning andInvestment, Vietnam's plan to disburse total foreign direct investmentcapital of 11.5 billion USD for the entire year might fall short as FIEshave disbursed only 10.05 billion USD in the past 11 months.
Meanwhile,FIE import revenues fetched 43.49 billion USD in the past 11 months, ayear-on-year increase of 31 percent, showing the sector had importedsignificantly.
In terms of creating jobs in the past 10years, FIEs have hired about 1.7 million local workers, accounting for10 percent of demand.
Deputy Minister Bien said that theimport-tariff schedule needs to be reviewed as well as the FIE mechanismof switching from production to imports and distributions.
Hesaid this should be done while assessing import-export management sothat regulations on granting distribution and import licences for FIEscan be properly adjusted./.
Thisis because they enjoy many incentives from reductions in import tariffreductions – sometimes down to zero – and other preferential policiesafter the country joined the World Trade Organisation (WTO).
Industryinsiders said that production, which create more jobs for locallabourers and transfer vital technology, cost more for FIEs to establishthan the commercial field.
Now, instead of pouring moneyinto Vietnam for production, FIEs tend to operate as traders only byimporting goods from their countries and then selling them in Vietnam. Consequently, domestic industries are becoming more dependent onforeign countries.
According to the Hai Quan (Customs)newspaper, nearly 20 years ago, the Japan-based Sony company began itsinvestment in Vietnam with only one assembly line and about 200local workers.
In 2008, the company announced that itdecided to halt operations in the country, meaning that it was notplanning to invest any more money for production. However, Sony-brandedproducts still sell like hot cakes.
Many other huge foreigncorporations have been establishing distribution networks instead ofinvesting more money in production.
Deputy Minister ofIndustry and Trade Nguyen Thanh Bien said that the new FIE trend willaffect adversely the country's inflation and trade deficit, and preventit from building a healthy industrial atmosphere.
Arepresentative of Vinaxuki JSC said that it is now unlikely that adomestic auto industry will be created, adding that the number of autoand motorbike producers has been squeezed down to 10 from 70 companiesin the past.
He said this proves that FIEs tend to switch from production to distribution and importing.
Accordingto the Foreign Investment Agency under the Ministry of Planning andInvestment, Vietnam's plan to disburse total foreign direct investmentcapital of 11.5 billion USD for the entire year might fall short as FIEshave disbursed only 10.05 billion USD in the past 11 months.
Meanwhile,FIE import revenues fetched 43.49 billion USD in the past 11 months, ayear-on-year increase of 31 percent, showing the sector had importedsignificantly.
In terms of creating jobs in the past 10years, FIEs have hired about 1.7 million local workers, accounting for10 percent of demand.
Deputy Minister Bien said that theimport-tariff schedule needs to be reviewed as well as the FIE mechanismof switching from production to imports and distributions.
Hesaid this should be done while assessing import-export management sothat regulations on granting distribution and import licences for FIEscan be properly adjusted./.
