It is urgent to assist domestic businesses to become a strong pillar ofthe Vietnamese economy, an economy whose growth has been largelyfostered by foreign direct investment (FDI) in recent years, expertssaid.
Since the Law on Foreign Investment wasissued in 1987, FDI inflow into Vietnam has strongly affected thecountry’s economy.
FDI makes up about 22-25 percentof the nation’s total investment and contributes 14 percent of the Statebudget, said Director of the Ministry of Planning and Investment(MPI)’s Foreign Investment Agency Do Nhat Hoang.
Thesector’s contributions to national GDP have also increased over theyears, reaching approximately 20 percent in 2014, he said, noting thatit creates jobs for more than 2 million people and another 3-4 millionindirectly.
During the first quarter of 2015, FDIbusinesses’ exports (including crude oil) hit 25.1 billion USD andaccounted for 70.3 percent of Vietnam’s total export value, he added.
Despite these positive economic impacts on the economy, experts pointed to existing problems in Vietnam’s FDI activities.
According to the MPI’s National Centre for Socio-Economic Informationand Forecast, many FDI projects operate in natural resourceexploitation, polluting industries and real estate, all of which areundesirable investment fields.
For many years, anumber of FDI firms have claimed losses with the intent to use transferpricing and evade taxes. Following several years of reported “losses”,some of those firms have come to dominate the manufacturing of numerousproducts such as fizzy drinks, detergents and animal feed, manipulatingthe domestic market and lowering domestic companies’ competitiveness,the centre said.
Meanwhile, the 25 percent FDIproportion of the total investment is relatively high and indicatesweakness in domestic investment, said Deputy Director of the Ministry ofTrade and Investment’s Industry and Trade Information Centre Le QuocPhuong.
Vietnam’s considerable dependence on FDI canalso be seen through 70 percent of total exports and over 60 percent ofthe national industrial production coming from the FDI sector, headded.
Vice President of the Central Institute forEconomic Management Vo Tri Thanh said if relevant support is effectivelyprovided, private businesses could become an important pillar of theeconomy, helping reduce dependence on the FDI sector.
Concurring, Hoang said domestic firms, especially small- andmedium-sized enterprises, should form the foundation of the Vietnameseeconomy. The State should put a greater focus on these companies andoffer them optimal policies, incentives and capital and technologyassistance.
Deputy Director of the MPI’s Departmentfor Economic Zone Management Vu Quoc Huy suggested domestic businesseslearn from the technology, management and promotion experience of FDIfirms to improve their capacity. State agencies also need to act as abridge between the two groups and raise the role of FDI companies,especially large-scale firms, in aiding domestic enterprises.-VNA
Since the Law on Foreign Investment wasissued in 1987, FDI inflow into Vietnam has strongly affected thecountry’s economy.
FDI makes up about 22-25 percentof the nation’s total investment and contributes 14 percent of the Statebudget, said Director of the Ministry of Planning and Investment(MPI)’s Foreign Investment Agency Do Nhat Hoang.
Thesector’s contributions to national GDP have also increased over theyears, reaching approximately 20 percent in 2014, he said, noting thatit creates jobs for more than 2 million people and another 3-4 millionindirectly.
During the first quarter of 2015, FDIbusinesses’ exports (including crude oil) hit 25.1 billion USD andaccounted for 70.3 percent of Vietnam’s total export value, he added.
Despite these positive economic impacts on the economy, experts pointed to existing problems in Vietnam’s FDI activities.
According to the MPI’s National Centre for Socio-Economic Informationand Forecast, many FDI projects operate in natural resourceexploitation, polluting industries and real estate, all of which areundesirable investment fields.
For many years, anumber of FDI firms have claimed losses with the intent to use transferpricing and evade taxes. Following several years of reported “losses”,some of those firms have come to dominate the manufacturing of numerousproducts such as fizzy drinks, detergents and animal feed, manipulatingthe domestic market and lowering domestic companies’ competitiveness,the centre said.
Meanwhile, the 25 percent FDIproportion of the total investment is relatively high and indicatesweakness in domestic investment, said Deputy Director of the Ministry ofTrade and Investment’s Industry and Trade Information Centre Le QuocPhuong.
Vietnam’s considerable dependence on FDI canalso be seen through 70 percent of total exports and over 60 percent ofthe national industrial production coming from the FDI sector, headded.
Vice President of the Central Institute forEconomic Management Vo Tri Thanh said if relevant support is effectivelyprovided, private businesses could become an important pillar of theeconomy, helping reduce dependence on the FDI sector.
Concurring, Hoang said domestic firms, especially small- andmedium-sized enterprises, should form the foundation of the Vietnameseeconomy. The State should put a greater focus on these companies andoffer them optimal policies, incentives and capital and technologyassistance.
Deputy Director of the MPI’s Departmentfor Economic Zone Management Vu Quoc Huy suggested domestic businesseslearn from the technology, management and promotion experience of FDIfirms to improve their capacity. State agencies also need to act as abridge between the two groups and raise the role of FDI companies,especially large-scale firms, in aiding domestic enterprises.-VNA
