08:30 | 10/02/2014 Economy
(VEN) - Vietnam achieved good results in attracting and disbursing foreign direct investment (FDI) capital. Vietnam Economic News’ reporter Nguyen Hoa spoke with Minister of Planning and Investment Bui Quang Vinh to broaden the understanding of FDI achievements in 2013 and FDI attraction directions for 2014.
Despite global economic difficulties, Vietnam attracted US$21.6 billion in FDI in 2013, an almost 66 percent increase from 2012. Why?
FDI capital soared in 2013 despite global and domestic economic challenges bringing success to the country. The Vietnamese investment environment was attractive for the following reasons:
First, the politics and the macro economy were stable, while social security was maintained.
Second, as Vietnam is located in the heart of the Southeast Asian region, it has road and railway systems which connect with countries in the Mekong sub-region, and is connected with international airways and seaways.
Third, Vietnam has a strong workforce and a big population of 90 million, of which 60 percent are available for work. Labor costs are fairly low when compared with regional countries. In the near future the country will meet the need for human resources both in terms of quality and quantity.
Fourth, Vietnam is a large market with increasing purchasing power and increasing incomes. The Vietnamese market is connected with the markets in the Association of Southeast Asian Nations (ASEAN) with a population of almost 600 million, China, Japan and the Republic of Korea.
Fifth, Vietnam’s international economic integration is deepening and expanding. The country currently is a member of the World Trade Organization (WTO), the ASEAN, the Asia-Europe Meeting (ASEM) and the Asia Pacific Economic Cooperation (APEC). It also has diplomatic ties with more than 180 countries and territories. Vietnam is negotiating to join the Trans Pacific Partnership (TPP) and several important Free Trade Agreements (FTAs) with the European Union (EU) and the Republic of Korea providing good opportunities for foreign businesses to invest to produce exports in Vietnam.
Sixth, the Vietnamese Government, ministries and sectors always appreciate the foreign investment sector by improving their investment and business institutions and policies, thus building trust among foreign investors in the country.
Countries in the region and worldwide are competing to attract FDI. What should we do in the near future to increase Vietnam’s competitiveness in attracting FDI?
The competition in attracting FDI is increasing, and Vietnam has to compete with countries which have experience in attracting FDI like Thailand, Indonesia and Malaysia. We also have to compete with countries which are less developing than Vietnam but are strongly improving their investment environment such as Myanmar, Laos and Cambodia. For this reason, improving the competitiveness of the Vietnamese investment environment is vital for attracting FDI for economic development in the short run.
Regarding solutions to make the goal happen, Vietnam needs to resolve existing ‘bottlenecks’ in attracting FDI. These lie in inadequate infrastructure, low-quality human resources, underdeveloped support industries and problems related to institutions, policies and administrative procedures. In addition, ministries and local authorities need to implement Governmental Resolution 103/NQ-CP dated August 29, 2013 on directions to improve FDI attraction, use and management in the near future. Following this, we need to take five key solutions – (1) making the investment law and policy system consistent, public, transparent, predictable, favorable for investors and competitive when compared with regional countries, (2) amending several principles on investment management and decentralization, (3) improving criteria on investment certification, (4) renewing investment promotion activities and (5) strengthening investment inspection and monitoring.
Ministries, sectors and local authorities should take specific tasks following Resolution 103/NQ-CP. Once they all seriously implement their tasks, I believe that the Vietnamese investment environment will significantly improve in the near future and that we will absolutely be able to compete with regional countries in attracting FDI.
What areas of investment and what kind of investors does Vietnam want to attract in 2014 and beyond?
Governmental Resolution 103/NQ-CP showed directions for attracting FDI in the near future by choosing high-quality, high-added-value, modern-technology and environmentally-friendly investment projects. Incentives will be given to areas such as information technology, biotechnology for agriculture, infrastructure development, high-quality human resource training, research and development and modern services. The Government will also encourage industrial projects which progressively change from processing to manufacturing, while choosing big-name reputable investors in order for them to develop the financial market and focusing on medium to small-sized projects which are suited to specific economic sectors and localities.
Vietnam needs to give incentives to several investment areas such as (1) building PPP and BOT transport, energy and urban infrastructure, (2) high-tech, high-added-value and environmentally-friendly projects, which effectively use natural resources, minerals and land and facilitate or link with domestic producers, (3) support industries, agriculture-oriented industries, advantageous services, information technology, engineering and electronics, (4) processing industries, (5) education and training like international-standard universities and vocational training schools, (6) healthcare focusing on international-standard general hospitals, medical facilities and pharmaceutical production factories and (7) agriculture like livestock breeding, cultivation and seafood and forest product processing using advanced technology.
As for investment partners, we still needs to focus on traditional and leading partners in the short term like Japan, the Republic of Korea, Singapore, Chinese Taipei and the US. In addition, we need to pay attention to attractive partners although they have not invested much in Vietnam such as Russia, Germany, the UK and Middle East countries./.