“Without FDI, the nation’s economy must have stood at about a meager growth rate of 3 percent - 4 percent annually for the last 25 years,” said Professor Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises.
Mai said many provinces had enjoyed staggeringly growing budget revenue thanks to FDI attraction only.
The northern Vinh Phuc Province is an example, he said.
In 1997, the budget revenue of Vinh Phuc was over VND100 billion but the figure shot up by 140 times to an impressive level of more than VND14 trillion last year, thanks to FDI.
From 2006 to 2010, the State budget revenue collected from foreign-invested firms reached US$10.5 billion, or an average year-on-year increase of 20 percent, said Do Nhat Hoang, head of the Foreign Investment Agency under the Ministry of Planning and Investment.
In 2011, this economic segment contributed $3.5 billion to the State budget, excluding crude oil.
According to Minister of Planning and Investment Bui Quang Vinh, FDI capital on average has made up around 18 of GDP and 56 percent of the total export value of the nation over the past 25 years.
“FDI has significantly motivated the nation to restructure the economy and has created favorable conditions for the development of local companies,” Hoang said.
“The local Government highly valued the role of FDI capital during the last 25 years,” he said.
However, foreign investors also lamented many shortcomings in the Vietnamese business environment.
Khalid Muhmood, co-founder of Apollo Education and Training and British University Vietnam, said an overwhelming presence of unnecessary laws and regulations made it difficult for his organization to conduct business.
He said laws in several cases were overlapping, or else, there were simply too many regulations.
Hirokazu Yamaoka of the Japan External Trade Organization (JETRO) said Japanese investors were concerned about the severe shortage of local power supplies, as well as other macroeconomic issues in Vietnam.
He said some of the Japanese investors interested in the 1,870-kilometer expressway project in 2020 were still afraid of risks under the format of public-private partnerships (PPP).
The JETRO representative also suggested that the Government should stabilize foreign exchange rates, trade balance, prices and salaries because these factors would influence investors’ decisions.
Yamaoka said Vietnam was in fact facing tough competition from heavyweight rivals in the region such as Thailand and Indonesia.
For instance, Japanese investment into Thailand over the past four years totaled $13.3 billion compared to only $5.3 billion committed in Vietnam.
Yamaoka thus urged the Government to take suitable measures to strengthen its competitiveness.