Vietnam seeking foreign technology transfer, not just investments

Domestic enterprises should take the initiative in training quality human resources

Below expectations

Data issued by the Ministry of Planning and Investment’s Foreign Investment Agency shows that as of late September, Vietnam attracted 24,199 FDI (foreign direct investment) projects totaling US$310.19 billion in registered capital from 116 countries and territories worldwide. Although Vietnam is attractive to foreign investors, it is lagging behind other countries in the region in terms of foreign investors’ technology transfer to domestic enterprises, with the transfer continuing to decline. Specifically, Vietnam’s ranking in this field fell from 57th place in 2009 to 103rd place in 2014, far behind that of Malaysia (13th), Thailand (36th), Indonesia (39th) and Cambodia (44th).

Deputy Minister of Science and Technology, Tran Van Tung, said FDI enterprises invested in Vietnam for profit, and they made use of the country’s natural resources, low labor cost and large market to increase revenue but not for transfer technology to domestic companies.

Dr. Le Thi Khanh Van, director of the Center for Science and Technology Application and Startup, said most FDI enterprises investing in Vietnam are foreign companies and not joint ventures or cooperation projects that would oblige them to transfer technology to Vietnamese enterprises.

Policy needed

Economists say that apart from domestic enterprises’ initiatives in this regard, the state needs policies to promote FDI companies’ technology transfer to domestic business.

Le Duy Thanh, Deputy Chairman of the Vinh Phuc Province People’s Committee, said domestic enterprises should take the initiative in training quality human resources and adopt policies to attract former workers of FDI enterprises with an approach to foreign technology. Meanwhile, the relevant state authority should formulate policies to encourage and force foreign investors to transfer technology to domestic companies when investing in Vietnam. For example, FDI enterprises in Vietnam could be required to reach a local content of at least 60 percent, encouraging them to work closely with domestic businesses to abide by the regulation and thereby promote technology transfer.

Nguyen Thi Tue Anh, deputy director of the Central Institute for Economic Management (CIEM), said business associations’ role in stimulating FDI enterprises’ technology transfer should be promoted. The associations would contribute to promoting and creating connectivity between FDI and domestic enterprises, and creating more opportunities for domestic enterprises to approach science, technology and the global value chain.