10:54 | 11/12/2017 Economy
(VEN) - The Ministry of Planning and Investment is drafting a new foreign direct investment (FDI) attraction strategy. With this strategy, the FDI sector is expected to contribute more to Vietnam’s economic growth.
According to the Foreign Investment Agency under the Ministry of Planning and Investment, Vietnam has attracted 24,000 FDI projects with total registered capital of US$313 billion from over 120 countries and territories in the world since 1987.
In the past 30 years, the FDI sector has contributed positively to Vietnam’s economic growth. Vu Van Chung, deputy director of the Foreign Investment Agency, said the contribution of the FDI sector to gross domestic product (GDP) growth increased from two percent in 1992 to 19 percent in 2016. In addition, the FDI sector accounted for 64 percent, 70.5 percent and 71.5 percent of the country’s total export turnover in 2012, 2015 and 2016, respectively.
The FDI sector has also contributed significantly to the budget revenue with an increase from US$1.8 billion in the 1994-2000 period to US$14.2 billion in the 2001-2010 period. In 2016, the FDI sector contributed about US$7.1 billion to the budget revenue, accounting for 15 percent of total state budget revenue. In addition, this sector has created jobs for more than 3.5 million direct workers and 4-5 million indirect workers.
In addition to the positive results, shortcomings and limitations have been available as investment attraction in high technology has not met potential. In addition, the spillover effect of FDI on the domestic sector has not been high. According to economists, the Ministry of Planning and Investment should soon complete a new FDI attraction strategy. This strategy will not only bring the problems to an end, but also focus on investment attraction in key sectors, especially given Vietnam’s participation in the international economic integration process.
Wim Douw from the World Bank Group’s Trade and Competitiveness Global Practice said Vietnam’s investment attraction over the past 30 years has been strongly boosted because of the country’s strengths in terms of cheap labor costs and preferential policies. However Vietnam’s position has completely changed. Therefore, a new FDI attraction strategy is needed.
Economists said that a new strategy should focus on high-tech sectors and environmentally-friendly projects.
Vietnam should offer solutions to increase the spillover effect of the FDI sector through strengthening connectivity between FDI businesses and domestic companies.