REVIEW
of
FINANCE -
Feb. 2018
19
implemented:
Firstly,
priority is given to attracting FDI in a
numberofhigh-tech industriesandproducts, creating
great added value such as information technology,
electronics, Internet, artificial intelligence. It should
be attached importance to underveloped industries
and careers.
Secondly,
in addition to attaching importance to
attracting FDI from small and medium enterprises,
it is necessary to give more priority to investment
capital from the world’s leading economic groups in
the hi-tech sector and to create new products with
high added value and quality, competitive in the
world market.
Thirdly,
It is necessary to adjust preferential
policies for FDI projects along with the direction of
linking with the socio-economic efficiency of the
development process of each economic region and
each locality. Labor-intensive FDI projects should
be resolutely rejected because they are causes of
environmental pollution, greenhouse gas emissions.
Fourthly,
It is the fact that the importance of the
policy of linking FDI enterprises with domestic
enterprises to overcome the spillover effects of
FDI enterprises are still not stressed. Therefore,
it is necessary to have efforts from both sides, that
is, FDI enterprises need strategic cooperation,
connecting with Vietnamese enterprises, actively
help businesses improve their capacity, meet the
needs of their own and find a cooperative model
for each product. In the opposite direction, domestic
enterprises need to be confident and proactive in
approaching FDI enterprises. Thereby, in order to
boost the internal strength to meet the requirements
of partners, Vietnamese enterprises need investment,
technology innovation and improve the quality of
human resources, seeking suitable segments to join
the supply chain at the same time.
References:
1. Foreign Investment Agency: Report on the situation of attracting foreign
investment through the years from2013 to 2017;
2. Foreign Investment Agency: 25 year summary report on FDI attraction in
Vietnam(1988-2013);
3. Foreign Investment Agency: Strengths in FDI attraction of Vietnam;
4. Ministry of Planning and Investment: “Orientations to attract FDI in the coming
time”;
5. Situation of FDI attraction in Vietnam period (1988-2016) - Finance Magazine
- December 2016.
and new technologies of FDI enterprises is very
great, so that many economic sectors of Vietnam
have advanced technologies compared to the local
area as well as the world such as oil industry, gas,
electronics, telecommunications. However, the story
of technology transfer, spillover effects of FDI sector
is not as expected. In fact, about 80% of FDI projects
use the world’s average technology, 14% are low and
backward and only 5-6% use high technology.
According to an annual survey conducted by
Vietnam Chamber of Commerce and Industry
(VCCI), FDI enterprises only buy about 26.6% of
equipments, inputs from Vietnamese enterprises,
the rest are imported and imported from the mother
companies. The reason is from the type of operation-
formerly there were many models of joint venture
between FDI andprivate, nowalmost FDI enterprises
are 100% foreign invested enterprises. This will
limit the transfer of advanced technology to local
businesses as expected and committed.
The practice of the automobile industry in
Vietnam is the best evidence of this. After many
years of development, at present, the technology of
automobile production is not much improved, still
only in the import of components and assembly. The
localization rate is only 15-40%, the production cost is
about 20%higher than that of otherASEANcountries,
and the supporting industry just stops producing
some simple components such as accumulators.
regulations, tires.
Fourthly,
the weak link between enterprises.
Currently, only about 300 Vietnamese enterprises
are qualified to meet the criteria of supporting
industry production for foreign corporations, the rest
still depends on the FDI sector. Therefore, in order for
FDI to contributemore to the economy, it is necessary
to increase the link between FDI and domestic
business sector, increase the deeper participation of
domestic enterprises in the global value chain. To
expand the FDI sector for Vietnamese enterprises,
Vietnamese enterprises need to be confident and
proactive in approaching FDI enterprises, investing
in technology and human resources. From then on,
Vietnamese enterprises can participate in the supply
chain in line with the level.
Some recommendations in attracting FDI
To overcome the shortcomings in attracting
FDI capital, the following contents should be
