Vietnam should pursue a clear plan on wooing foreign investors that are able to create breakthroughs for overall economic development and nurture alliances with domestic firms, experts have urged.
Illustrative photo (Source: VOV)
The General Statistics Office of Vietnam under the Ministry of Planning and Investment (MPI) reported that the inflow of newly registered investment capital and equity purchase by investors from China and Hong Kong (China) reached US$7.5 billion during the first half of the year.
The six-month figure indicates a sudden growth in the Chinese investment inflows into Vietnam as it is much higher than the total of US$3.7 billion seen in 2017 and US$5.8 billion in 2018.
Experts from Vietnam Institute for Economic and Policy Research (VEPR) asserted their belief that China remains a moderate FDI investor in comparison with “major players” like Japan and the Republic of Korea as it occupies only a small proportion of the country’s total FDI inflows.
Meanwhile, controversies remain over the negative impacts that Chinese-invested projects could have on the country, especially those related to obsolete technologies and excessive pollution.
Dr. Nguyen Duc Thanh, director of the VEPR, said that the country has already experienced a phase of attracting FDI at any cost, for the purpose of boosting mutual development. The country now opts to be more selective with foreign investments.
The country has sketched out a draft blueprint to lure FDI for a new phase of development, with a clear focus on quality and effectiveness. Despite this, experts have expressed their concern that creating filters for FDI inflows is not a simple matter as the definition of high technologies, core technologies, and the priorities given to FDI projects, have yet to be clarified.
Given this, many localities have attached more importance to the total registered capital of FDI projects as opposed to the quality.
Dr. Tran Toan Thang, head of the pision for international economics under the MPI National Center for Socio - Economic Information and Forecast, said that although the influx of FDI from mainland China remains modest, the combined Chinese FDI, including those from Hong Kong and Macau has reached a considerable value.
Thang underlined the need to make in-depth research and analysis regarding the impacts that Chinese FDI inflows could have on the Vietnamese economy, with a precise approach needed to update the profile of each Chinese investor.
Assoc. Prof. Dr. Hoang Van Cuong, vice rector of the Hanoi-based National Economics University, suggested that the country should embrace the process of selecting FDI inflows. “If we okay all foreign investors that are capable of disbursing their committed investment capital, this could lead a fierce competition between Vietnamese firms and foreign rivals, even hampering the market foothold of domestic ones.”
The country should therefore focus on luring foreign investors that are capable of creating breakthroughs for the purpose of fostering mutual development as well as linkages with domestic enterprises.
Nguyen Chi Dung, Minister of Planning and Investment, said during a recent meeting to review the ministry’s performance during the first half of 2019 that special attention must be paid to the future attraction and management of foreign investments, particularly those related to input materials and infrastructure investment.
The minister asserted that drastic measures would be taken to halt illegal foreign investment and prevent poor-quality FDI, high-energy absorbing projects, and those likely to pose threats to the environment.