Vietnam will continue offering incentives for foreign direct investment (FDI) projects, but will tighten control over the selection process, so as not to try to attract the investment flow by any means.
Minister of Planning and Investment Bui Quang Vinh
This was confirmed by Minister of Planning and Investment, Bui Quang Vinh, at a dialogue held on July 7.
According to the minister, FDI currently accounts for one fourth of the country’s total social investment. Besides, FDI enterprises are among major factors increasing the nation’s exports. However, the massive withdrawal of FDI projects over the past two years has raised questions about the wisdom of the use of FDI capital as well as Vietnam’s competitiveness in drawing from these capital source.
“Two decades ago, Vietnam remained a golden land for foreign investors for its abundant natural resources and cheap labour. The country even offered to pay for site clearance. However, these advantages have gradually lost their attraction. Now we have to scrutinise FDI projects and choose high-tech ones of large value to mitigate environmental pollution. Meanwhile, infrastructure in Vietnam is still limited and administrative procedures have not much improved, discouraging foreign investors," the minister said.
Cheap labour is no longer Vietnam’s advantage as the country’s per capita income has been increasing, resulting in the rise in minimum salary. This is one of the biggest worries for foreign investors.
Vietnam will continue giving priorities for foreign investors, but will not roll red carpet for them like in the initial period of opening door to them, Vinh said, noting that, “We will only prioritise areas with high added value which can generate interests for both the nation and local enterprises.”
Regarding revoked FDI projects due to sluggish implementation, while their investors try to shirk compensation for local people, the minister said it is a difficult to sanction them. “We have considered this, finding that no country in the world has applied regulations on punishing foreign investors, except for the withdrawal of slow projects. We are learning from the world's experience,” he said.
The minister said, “I agree with the quick appraisal of FDI projects as long as the investors have careful considerations for the project efficiency, after that they can be granted land.”
According to the minister, Thailand and Indonesia are very attractive to investment and they opened their doors to foreign investors many years before Vietnam. Therefore, to date, up to 7,000 Japanese companies have invested in Thailand compared to just 1,500 in Vietnam.
He added, however, that the information that Japanese companies had poured billions of USD nto Myanmar is inaccurate, saying that they have just surveyed the market for big projects.
