Vietnam to focus on effective FDI for sustainable development
By Thu Nguyet - The Saigon Times Daily
HCMC – Vietnam will focus on attracting effective foreign direct investment (FDI) for its long-term development instead of racing for big amounts of FDI regardless of quality as it did in the past, Dang Huy Dong, deputy minister of Planning and Investment.
“Some FDI companies in Vietnam have been operating ineffectively regarding many factors, including environment pollution, unreasonable and illegal labor usage and little contribution to the country’s economy,” Dong said to local media recently.
A report by the Central Institute for Economic Management (CIEM) under the Ministry of Planning and Investment and Asia Competitiveness Institute (ACI), an affiliated institute of the Institute for Strategy and Competitiveness at Harvard University, shows a falling productivity of FDI companies and there is little evidence of positive spill-over from FDI towards the rest of Vietnam’s economy in improving productivity and technology.
“It’s time to check FDI companies to select good ones with big contributions in order to care and support their developments, while bad ones need to be checked and licenses withdrawn in accordance with Vietnamese laws,” Dong added.
He said the ministry could not do the whole process at the same time. Therefore, FDI companies in some noticeable industries will be checked first to learn and build a policy to attract effective FDI. However, a check timeline and industries affected were not detailed by the official.
According to the report, the country’s attractiveness to foreign investors is almost solely the result of the low prevailing wages, but the cheap-labor attractiveness will reduce due to competition from other countries in ASEAN. It is suggested Vietnam have a new FDI strategy if it aims for effective investment to create more than minimum-wage jobs.