The Hanoi Times - At a seminar on economic growth held by the Ministry of Foreign Affairs on August 17, Professor James Riedel from Johns Hopkins University in the US said that Vietnam needs to balance the preferences given to foreign and domestic investors.
According to the professor, it seems that Vietnam is now giving more preferences to foreign investors than to domestic investors. He also advised policy makers that they should not think that foreign direct investment can bring higher efficiency then domestic investment.
Sharing the same view as the professor, the assistant to the United Nations’ Secretary General in economic development since 2005, Professor Jomo Kwame Sundaram, also said that Vietnam needs to give equal preferences to investors so as to ensure economic recovery after the crisis and aim at sustainable growth.
He said that Vietnam is still weak in mobilising domestic investment sources, which is important in the balancing of investment sources and can help Vietnam avoid relying too heavily on FDI.
According to Professor James Riedel, there are two problems that have led to the low efficiency of foreign direct investment in Vietnam: poor technical and social infrastructure and the underdeveloped private sector.
However, he said that any hastiness in privatising businesses will not bring the desired effects. He said that Vietnam needs to implement privatisation and state-owned enterprises renovation programmes at the same time in order to create favourable conditions for businesses to develop.
Regarding the current global economic recession, the participants at the seminar heard that this was the worst crisis in modern times. Vietnam has been highly applauded for remaining a good investment destination. While 100 economies in the world have witnessed minus growth rates, Vietnam still maintains a positive growth rate, though the rate is not very high.
According to Professor Jomo Kwame Sundaram, FDI really can help Vietnam successfully implement its MDG, but should not be considered as the ‘golden key’. Attracting FDI should mean technology transfer and market access, the necessary things to develop economies.
An UNCTAD (United Nations Conference on Trade and Development) report on global FDI showed that the FDI in the world dropped by 54 percent in the first quarter of 2009 and forecast continued gloomy prospects in the remaining months of the year. However, it believes that the investment flow will recover next year before surging sharply in 2011, alongside the global economic recovery.