FDI shifting trend beneficial to (VOV) - Though foreign direct investment (FDI) capital declined in the first quarter of the year, economists say After the Ministry of Planning and Investment announced that newly registered and increased FDI capital equalled 61.4% and 39.3% of the corresponding figures in the first quarter of 2013, there was growing concern about the prospect of FDI attraction for the whole year. Several economists even feared there is unfair competition between FDI and domestic businesses when the former outplay the latter in terms of exports, industrial production and services development. Professor Nguyen Mai, former deputy chairman of the State Committee of Cooperation and Investment, now the Ministry of Planning and Investment, told Vietnam Investment Review domestic businesses are the mainstay of the national economy in international integration. He said the government needs to introduce more effective solutions to save businesses in difficulty and stimulate business development by heavily investing in technology and human resources, so as to increase the competitiveness of the economy both at home and abroad. However, Mai agreed international integration requires
FDI contribution There is no doubt FDI businesses have made a substantial contribution to economic restructuring, technology transfer, job generation, and human resources training since Dong Nai and Binh Duong provinces which have drawn large amounts of FDI and achieved two-digit growth recently are facing a serious on-site labour shortage while the country is combating unemployment, even in All the same, Professor Mai raised concerns about several shortcomings that need to be addressed soon. In his opinion, most of the FDI projects licensed in the first quarter of 2014 are small. Among the 252 licensed projects, only 5 have total registered capital of nearly US$1 billion, and the remainder have combined registered capital of US$1 billion, or nearly US$4 million each on average. He said it’s time to focus on FDI quality rather than small projects to make the investment environment healthier. In addition, shortcomings in carrying out investment cooperation models reduce FDI impact on the economy. It’s worth remembering that about 70% of FDI businesses established in the 1990s were operating in the form of joint venture companies, and this model proved effective, improving the operational efficiency of the JVs.
Yet, the investment landscape has changed since the start of the 21st century, with more than 80% of businesses wholly foreign invested. Therefore, Professor Mai underlined the need to fix the maximum level of capital ownership of foreign investors in a certain number of industries and services. On the other hand, FDI attraction is spontaneous in a number of industries such as cement, steel, as well as in industrial and economic zones, causing a growing imbalance in the market law of supply and demand, causing a big loss to the economy. The Ministry of Planning and Investment reports 10 localities have asked the government to build foreign invested integrated resorts, though no research has been done on advantages and disadvantages of these projects. FDI shifting trends Despite a considerable fall in FDI in the first quarter, Mai said China, the world’s second largest economy that has attracted approximately 50% of FDI into developing countries, is meeting a big challenge for investors from the US, Japan, Europe and the Republic of Korea, resulting in the China + 1 policy. Judging from the current context,
Samsung Electronics is a case in point. The Together with another US$2 billion mobile phone plant project in Thai Nguyen province and a Hanoi-based research and development centre accommodating 800 engineers, the company’s revenue made up 15% of Worthy of note is that these Samsung-invested projects moved from neighbouring countries to In an endeavour to improve the quality and efficiency of FDI use and management, according to Professor Mai, VOV |
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