Vietnam’s strategy looks to attract new-generation FDI flows

The new generation FDI attraction strategy aims to diversify potential markets and partners (Photo: VNA)

Hanoi (VNA) – The Government has officially assigned the Ministry of Planning and Investment (MPI) to urgently complete a new-generation FDI attraction strategy, focusing on solutions to increase connectivity and technology transfer between foreign-invested enterprises and domestic firms, and attract more FDI to high-tech sectors. 

Bottlenecks to be removed

According to the MPI’s Foreign Investment Agency (FIA), Vietnam recorded 22.63 billion USD of foreign direct investment (FDI) in the first eight months of 2019, equivalent to 92.9 percent of the figure in the same period last year.

Of the sum, 9.13 billion USD was poured into 2,406 new projects, down 32.3 percent and up 25.4 percent year on year, respectively.

The disbursement of FDI in the period reached 11.96 percent, presenting a year-on-year increase of 6.3 percent.

Notably, Hanoi topped the list of FDI destinations with 5.66 billion USD, or 25 percent of the total capital. It was followed by Ho Chi Minh City with 3.86 billion USD, accounting for 17 percent of the total.

However, Kyle F. Kelhofer, Country Manager for Vietnam, Laos, and Cambodia of the International Finance Corporation (IFC), pointed out existing weaknesses in luring FDI in Vietnam.

He said the overlapping management and the lack of cohesion and effectiveness in inter-sectorial coordination have made Vietnam’s FDI attraction not reach its full efficiency.

Sharing Kelhofer’s opinion, Chairman of the Hanoi People’s Committee Nguyen Duc Chung also pointed out other reasons for the problem.

Chung said Hanoi’s leaders had hundreds of meetings with investors and international organisations to learn about the investment environment.

Municipal authorities coordinated with international experts to build a startup ecosystem, showing Hanoi's determination in creating a favourable, transparent and supportive business environment for foreign investors, he noted.

Staff working at departments and sectors have been requested to listen to enterprises at conferences and direct meetings and symposiums, thus mapping out measures to solve difficulties facing them, Chung added.

Meanwhile, Chairman of the Ho Chi Minh City People’s Committee Nguyen Thanh Phong said in the coming time, the locality will pay attention to improving the investment environment and actively supporting enterprises and investors.

According to Phong, the growth in investment activities is showing that the confidence of domestic and foreign enterprises in the city’s business and investment environment has improved markedly.

In order to achieve the set goal of FDI attraction, the Government, ministries and sectors need to complete mechanisms and policies to create a legal corridor in managing, supervising and implementing licensed FDI projects, Chung said.

He emphasized that it is necessary to supplement the coordination, management and supervision mechanism for licensed FDI projects; clearly define and direct the implementation of coordination mechanism among relevant agencies at all levels in managing and supervising licensed FDI projects; and build regulations on responsibility and obligations of investors and enterprises and sufficiently strong sanctions against violations, in order to increase the effectiveness of FDI attraction.

The strict and effective post-license management will contribute to improving the quality of FDI flows, Chung said.

Localities and regions will lure FDI in accordance with their advantages, conditions, development and planning in the regional linkage. (Photo: VNA)

Fourth Industrial Revolution-based new FDI attraction

Vietnam is preparing for the building of a socio-economic development strategy for 2021-2030, which will still give priority to attracting foreign investment.

According to Minister of Planning and Investment Nguyen Chi Dung, Vietnam aims to lure FDI to hi-tech and environmentally friendly industries, clean energy, medical equipment, health care, education-training, hi-quality tourism, financial service, logistics, hi-tech agriculture, infrastructure development, and new sectors on the basis of the 4^th industrial revolution.

Accordingly, localities and regions will lure FDI in accordance with their advantages, conditions, development and planning in the regional linkage, to ensure the overall socio-economic-environmental development efficiency.

The country’s new-generation FDI attraction strategy aims to diversify potential markets and partners.

In addition to attaching importance to existing markets, it will expand relationships with strategic partners, especially developed countries and transnational corporations which hold advanced technologies and modern management qualification.

In order to achieve goals in line with its vision orientation to 2030, Vietnam needs to implement an ambitious plan in parallel with promoting institutional reform, while also improving the investment environment, said Kelhofer.

Groups of experts from the IFC and the MPI have carried out a strategic report study and built a new-generation FDI attraction orientation with breakthrough proposals.

Kelhofer said solutions have focused on the effective implementation of recommendations instead of rolling out new measures in the context that existing policies have not been fully implemented.

Enhanced policies need to be based on a full understanding of the root causes of FDI attraction limitations so far, Kelhofer emphasized./.

Expected outcomes of the new generation FDI attraction strategy and orientation for the 2020-2030 period