Utilizing the FDI inflow to go forward
Updated at Tuesday, 09 Jan 2018, 07:25
The Hanoitimes - New orientation in attracting foreign direct investment (FDI) is taken toward the direction of serving Vietnam’s socio-economic development.
As such, the latest resolution No. 01/NQ-CP of the government on key missions and solutions in realizing the socio-economic strategy has proposed policies and regulations to support economic development in close relation with FDI. For example, in 2018, one of the key solution emphasized by the government is to develop industrial sectors, with priority focuses on Vietnam’s manufacturing and processing industry; industrial sector supporting agricultural sector; supporting industries in linkage with value chain of multinational corporations.
With regard to solutions on searching and expanding new markets for Vietnam’s goods and services, the government also stresses on the importance of attracting FDI and Offical Development Assistance (ODA) toward priority industries. According to Prof.Dr. Nguyen Mai, Chairman of the Vietnam Association of Foreign Invested Enterprises, Vietnam has come to the point when the importance is not only the number of registered FDI and disbursement progress, but also how to utilize the FDI inflow with an aim to serve Vietnam’s socio-economic targets.
Vietnam now put priority on high quality FDI projects to serve the purpose of socio-economic development.
The Resolution No.103/NQ-CP on orientations to increase efficiency of attracting, using and managing FDI in future stated, to create strong changes of FDI attraction in selective directions of projects with high quality and added value, using modern technologies friendly with environment, especially in information technology and biological technology serving agriculture; development of infrastructure, training human resources at high quality, research and development, modern services.
At the same time, to strengthen attraction of projects with large scale, products with high competition, participation in global value chain of transnational corporation, hence build and develop system of auxiliary sectors and enterprises; encourage industrial projects to change gradually from processing to production; select the big and prestigious investors to develop the financial market; concurrently, attach special importance to projects with medium and small scales in conformity with each industry, locality. On the other hand, it is important to encourage, facilitate and strengthen the linkage between FDI enterprises with domestic enterprises; to plan FDI attraction under sectors, fields, partners conforming to advantage of each region, each sector, so as to promote the investment efficiency of each locality, each zone conforming to the master plan, ensure the national overall benefit and restructure of economy according to new model growth.
Currently, the weak point in Vietnam’s effort of attracting FDI is the linkage between FDI sector and domestic enterprises. The lack of potential suppliers’ ability to conform to multinational enterprise’ quality, price and reliability standards has been identified as one of the major constraints to backward to linkages in Vietnam. Several constraints and weaknesses of the domestic private sector are looked at, including the quality of products, access to finance, innovation, skills, etc. Access to finance is perceived as one of the top business constraints by firms surveyed in Vietnam, with a significantly higher proportion of firms declaring it as their main constraint than in Malaysia, Thailand and China.