Vietnam promotes the role of FDI companies in country’s exports

14:38 | 16/12/2019 Investment

(VEN) - Vietnam’s exports have yielded impressive growth in recent years, with the FDI sector accounting for the majority of export revenue. However, many experts have expressed their concerns about impact on the sustainability in export growth as well as on Vietnam’s autonomy in development.

vietnam promotes the role of fdi companies in countrys exports

Tran Thanh Hai, deputy director of the Agency of Foreign Trade under the Ministry of Industry and Trade, said policies to encourage export-oriented foreign investments have created favorable conditions for Vietnam to access and expand its markets in the world and enhance its competitive edge, thereby helping the country participate in and improve its position in the global value chain. In 2001, exports of the FDI sector accounted for 45.2 percent of Vietnam’s total export turnover, including crude oil. The proportion has increased gradually over the years, reaching 57.2 percent in 2007 and 71.4 percent in 2018.

The domestic sector has also made great contributions to export growth. In recent years, domestic businesses have recorded a rise in their exports at a rate higher than the export growth rate of FDI companies. Specifically, domestic sector exports reached US$69.7 billion in 2018, an increase of 16.8 percent compared to a year ago.

In the first nine months of 2019, the domestic sector continued to be a bright spot in Vietnam’s export activities with growth of 16.4 percent, doubling the national average growth rate (8.2 percent) and tripling the growth rate of the FDI sector (five percent). The results reflect Vietnam’s efforts to improve its business and investment environment and international economic integration, creating favorable conditions for business production and operations, especially in industrial production.

The FDI sector’s participation in exports has affirmed its contribution to the country over the years. Specifically, the sector has contributed to changing the structure of export commodities toward reducing the proportion of mining products and primary goods, and gradually increasing the proportion of manufactured goods (electronics, computers and components, plastic products, wires and cables, bicycles and accessories). Before 2003, crude oil accounted for nearly half of the FDI sector’s exports, but since 2007, the proportion of crude oil in total export revenue has stood at about seven percent, reflecting the adjustment towards export-oriented manufacturing activities. In addition, the sector has had positive impact on the expansion of export markets, the stability of the domestic market, and limiting the trade deficit.

In a report sent to the National Assembly, the Ministry of Industry and Trade affirmed important issues for consideration, which are the structure of the FDI sector’s exports, and the sector’s contributions to economic growth.

Tran Thanh Hai said the Ministry of Industry and Trade will create conditions for FDI companies to own high-value and high-tech production lines and products. In addition, the ministry will focus on promoting the spillover of FDI companies, while helping domestic businesses participate in global value chains.

The Ministry of Industry and Trade encourages large FDI companies to establish joint ventures, develop support industries, and increase local content through promoting links with domestic suppliers. In addition, they are also encouraged to transfer modern technologies and management skills to domestic businesses through joint venture projects and cooperation in a number of important areas of the economy.

The Ministry of Industry and Trade will coordinate with the Ministry of Planning and Investment and other ministries and departments to review and remove a number of barriers to market entry for foreign investors in some industries and areas in which Vietnam no longer needs protection.

Bao Phuong