HANOI – The Ministry of Planning and Investment is mapping out a new strategy for foreign direct investment (FDI) attraction amid global changes prompted by the fourth industrial revolution and new-generation trade agreements.
At a workshop on recommendations on Vietnam’s next-generation FDI strategy and vision in 2020-2030 in Hanoi today, July 9, Deputy Minister of Planning and Investment Vu Dai Thang said that this year marks Vietnam’s 30 years of FDI attraction. Though FDI capital has in the past time made significant contributions to the country’s socio-economic development, Thang admitted that the quality of capital use is still low.
The goal of attracting FDI capital to high-tech sectors has not met expectations, while the coordination between FDI firms and domestic projects to create higher added value for the economy is limited, he observed.
The planning-investment ministry is working with relevant ministries and agencies to draft a 30-year review report on FDI attraction, which will be submitted to the Government next October.
The report covers reviews of contributions and management of FDI capital, with proposed solutions to issues like the suitability of existing incentives in new situations and what priority sectors are. It also takes into account solutions concerning screening and prioritizing high-tech, environmentally friendly projects as well as solutions to enhance connections between local and FDI firms against a background of 12 free trade agreements Vietnam has signed.
Also at the workshop today, the ministry introduced a report with recommendations on next-generation FDI attraction of Vietnam in 2020-2030, which was prepared with the support of the International Finance Corporation (IFC), a member of the World Bank Group.
According to the report, FDI capital flow into Vietnam has mainly been spurred by low-cost labor and big incentives.
In the report, investors concede that a shortage of skilled labor is a barrier to growth. Also, a lack of integrated supply chains, qualified domestic suppliers and effective policies to assist local firms has hindered competitive capabilities of those firms.
Such problems, if solved, will help the Government make better use of opportunities, Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia and Laos, said.
As recommended in the report, the top priority is implementing specific policies to strengthen the connectivity of value chains and spillover effects of FDI.
To address challenges and seize opportunities of Industry 4.0, Vietnam needs great efforts to build a business environment which meets the needs of enterprises in the digital era.
Other recommendations concern the formulation of a national plan on skills enhancement to help Vietnam speed up the shift from low-skilled labor to high-skilled labor, modernization of investment promotion, reviews of current investment incentives, opening of some important service sectors to foster competitiveness and growth in terms of foreign investments, and issuance of investment promotion strategies.
The Government needs to set up a new-generation management agency which has sufficient authority and budget to ensure the effective implementation of those recommendations.