A three-decade review

09:03 | 29/12/2017 Economy

(VEN) - The last three decades marked significant changes, both quantitative and qualitative, in foreign direct investment (FDI) in Vietnam. FDI has significantly contributed to positive changes in the Vietnamese economy, as well as to improving Vietnam’s position in global value chains.

a three decade review

Important achievements

In late 1987, the National Assembly approved the Law on Foreign Investment in Vietnam. For more than three decades, by September 2017, Vietnam had attracted more than 23,000 FDI projects with total registered capital of over US$300 billion, of which about US$161 billion had been disbursed, accounting for 53 percent of the total.

Data from the Vietnam Association of Foreign Invested Enterprises (VAFIE) show that FDI has contributed to increasing Vietnam’s investment in development and helped the country generate jobs, increase state budget revenue, promote technology transfer and accelerate international integration. The FDI sector has created 72 percent of Vietnam’s export value.

Vietnam has attracted FDI from large multinational groups, such as Honda, Intel, Samsung, Yamaha, Panasonic, Microsoft and LG. These groups have invested billions of US dollars in Vietnam, aiming to turn Vietnam into their new manufacturing hubs.

Experts believe the presence of these giants in Vietnam has contributed to boosting Vietnamese support industries, creating high-quality human resources for Vietnam and improving its position in export markets.

FDI’s growing role

According to Do Nhat Hoang, Director of the Ministry of Planning and Investment’s Foreign Investment Agency, the government’s efforts to improve the investment environment have been highly appreciated by foreign investors.

The FDI sector has significantly contributed to socioeconomic development in Vietnam, accounting for about 25 percent of the country’s total investment in development, and creating more than 20 percent of Vietnam’s gross domestic product (GDP). Tax payments by FDI businesses account for a large percentage of state budget revenues.

The FDI sector has also contributed to the restructuring of the Vietnamese economy, the reform of state owned enterprises, the simplification of administrative procedures, the improvement of market economy institutions and acceleration of the country’s integration into the global economy.

According to Dr. Phan Huu Thang, former director of the Foreign Investment Agency, FDI businesses, with strong financial capacity, modern technology and management skills, have created major changes in the Vietnamese economy and infrastructure, helping improve Vietnam’s image in the international arena.

By the end of October 2017, Vietnam had attracted more than 24,000 FDI projects with total registered capital of over US$310 billion from 124 countries and territories. The Republic of Korea takes the lead with US$55.8 billion, followed by Japan with nearly US$46 billion and Singapore with more than US$41 billion. Vietnam has also attracted investment from other developed countries, such as the US, France, the UK, Switzerland, Russia and Germany. FDI in Vietnam is concentrated in fields such as the processing and manufacturing industries (nearly 60 percent), real estate (17 percent) and power generation (about six percent). So far, US$167 billion of FDI have been disbursed, accounting for over 53 percent of total registered foreign capital.

Phu Thoi