Vietnam recently issued many preferential policies to attract foreign investors. However, to boost foreign investment and attract quality projects, the nation should adopt selective policies that tally with investors' demands.
Vietnam News Agency talks with Nguyen Dinh Cung, Director of the Central Institute for Economic Management, about the issue.
*In the first five months of this year, foreign direct investment (FDI) inflow hit 5.5 billion USD, including expanded and new projects. This was only 65.7 percent of the number recorded in the same period in 2013. Why the decline?
I think we should not just compare FDI numbers with the same period in the previous year. The annual FDI inflow is steady at about 10 billion USD in recent years, accounting for 18 percent of GDP and 55 percent of total investment.
This year, the figure is projected to be about 10-11 billion USD. Overall, Vietnam's FDI has been stable and met the country's actual needs. However, the current policy to attract FDI is incoherent.
I think Vietnam should view FDI as an important impetus for economic growth and seek FDI quality. In fact, many localities have begun to be selective in drawing FDI that brings in more environmentally friendly and high-tech projects.
In the future, the number of FDI projects may decline as provinces give priority to better quality projects.
*What do you think about the quality of current FDI projects?
With regards to quality, we should evaluate it according to our needs. And, in addition to numbers of projects, it is essential to consider other criteria such as foreign-currency earnings and balance of trade, technology transfer and spreading its effects, job creation and training - and creating products with added value.
In my opinion, generating added value is good for both invested companies and other domestic enterprises which help connect local businesses with global value.
However, technology transfer in current projects is far behind the country's expectations. In reality, this is not viewed as important as other criteria.
*What were the problems in attracting FDI in the past?
In recent years, we have attracted many projects that generated many jobs, but quality of labour productivity and technology did not meet demands.
The country's economy is expanding - and so is the cost of labour. Thus, Vietnam needs to change its model of development and rely more on quality and effectiveness. We have issued policies to boost FDI quality, but I think we should fine-tune policies to generate more that suit the needs of foreign investors.
*Currently, many projects are delayed, but provincial departments of planning and investment have reasons to defend their positions. How should we do to deal with this?
In recent years, provinces have attracted FDI en masse, but more and more delayed projects teach us that we should be selective in attracting investments. We have laws enabling us to revoke projects that are not implemented within a certain time.
I think it's a fair deal. We should not permit inept businesses undertake projects, but we have the rights to take back land handed over or leased to those companies. However, this work should be done thoroughly, publicly and fairly. This will help create a transparent and fair investment environment.
*What policies should Vietnam issue to lift foreign investment?
Resolution No 103/NQ-CP dated August 29, 2013, on orientations for more efficient ways of attracting FDI, the use of this investment and its management covers this issue comprehensively.
Therefore, localities must have clear orientations and selection criteria for attracting investment. For example, a province that wants to develop its high-tech sector should build criteria to select these projects as well as investors.
Although many may think this might create unfair mechanisms for other investors, I think provinces have their own rights to assign land to investors. Thus, if provinces are clear in policies to attract investment, this will be supported by all investors.
Apart from anything else, provincial policies need to be transparent and of benefit to both sides.-VNA
Vietnam News Agency talks with Nguyen Dinh Cung, Director of the Central Institute for Economic Management, about the issue.
*In the first five months of this year, foreign direct investment (FDI) inflow hit 5.5 billion USD, including expanded and new projects. This was only 65.7 percent of the number recorded in the same period in 2013. Why the decline?
I think we should not just compare FDI numbers with the same period in the previous year. The annual FDI inflow is steady at about 10 billion USD in recent years, accounting for 18 percent of GDP and 55 percent of total investment.
This year, the figure is projected to be about 10-11 billion USD. Overall, Vietnam's FDI has been stable and met the country's actual needs. However, the current policy to attract FDI is incoherent.
I think Vietnam should view FDI as an important impetus for economic growth and seek FDI quality. In fact, many localities have begun to be selective in drawing FDI that brings in more environmentally friendly and high-tech projects.
In the future, the number of FDI projects may decline as provinces give priority to better quality projects.
*What do you think about the quality of current FDI projects?
With regards to quality, we should evaluate it according to our needs. And, in addition to numbers of projects, it is essential to consider other criteria such as foreign-currency earnings and balance of trade, technology transfer and spreading its effects, job creation and training - and creating products with added value.
In my opinion, generating added value is good for both invested companies and other domestic enterprises which help connect local businesses with global value.
However, technology transfer in current projects is far behind the country's expectations. In reality, this is not viewed as important as other criteria.
*What were the problems in attracting FDI in the past?
In recent years, we have attracted many projects that generated many jobs, but quality of labour productivity and technology did not meet demands.
The country's economy is expanding - and so is the cost of labour. Thus, Vietnam needs to change its model of development and rely more on quality and effectiveness. We have issued policies to boost FDI quality, but I think we should fine-tune policies to generate more that suit the needs of foreign investors.
*Currently, many projects are delayed, but provincial departments of planning and investment have reasons to defend their positions. How should we do to deal with this?
In recent years, provinces have attracted FDI en masse, but more and more delayed projects teach us that we should be selective in attracting investments. We have laws enabling us to revoke projects that are not implemented within a certain time.
I think it's a fair deal. We should not permit inept businesses undertake projects, but we have the rights to take back land handed over or leased to those companies. However, this work should be done thoroughly, publicly and fairly. This will help create a transparent and fair investment environment.
*What policies should Vietnam issue to lift foreign investment?
Resolution No 103/NQ-CP dated August 29, 2013, on orientations for more efficient ways of attracting FDI, the use of this investment and its management covers this issue comprehensively.
Therefore, localities must have clear orientations and selection criteria for attracting investment. For example, a province that wants to develop its high-tech sector should build criteria to select these projects as well as investors.
Although many may think this might create unfair mechanisms for other investors, I think provinces have their own rights to assign land to investors. Thus, if provinces are clear in policies to attract investment, this will be supported by all investors.
Apart from anything else, provincial policies need to be transparent and of benefit to both sides.-VNA
