This recommendation was put forward yesterday in Hanoi by experts attending a workshop on improving the quality of FDI inflows in Vietnam.
The workshop, co-organised by the Vietnam Investment Review (VIR), Foreign Investment Agency (FIA) and the Centre for Foreign Investment Studies (CFIS), drew over 250 central and local government officials, economists, domestic and foreign investors.
Over the past 25 years, FDI projects have provided a major boost to the national economy but they have also had some serious drawbacks that are hindering the sustainable development of the Vietnamese economy.
Pollution at industrial zones is spreading widely due to the use of outdated machinery and technologies. A number of long-running labour disputes remain unresolved and land and mineral resources have not been utilised effectively.
FIA Head Do Nhat Hoang acknowledged that Vietnam has not fully tapped into the potential of FDI inflows despite a strong demand for foreign investments.
Professor Nguyen Mai, Chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE), pointed out six main negative issues related to FDI activities including outdated technologies, environmental pollution, transfer pricing, worker and employer disputes, inadequate investment management capacity and the establishment of unplanned industrial and economic zones.
These problems highlight the urgent need to raise the quality of FDI projects so that they will make a positive contribution to Vietnam’s development.
Professor Mai said that the quality and efficiency of FDI projects should be in line with targets set in national and local socio-economic development strategies. Investors must also be required to meet environmental protection standards and use modern technology to help ensure sustainable development.
Professor Mai added that Vietnam has the right to select investors and projects it deems appropriate and either encourage or restrict FDI inflows depending on specific situations.
However, many provinces failed to exercise their authority to select appropriate investors and failed to stick to their original plans.
As a middle-income country, Vietnam needs to attract more FDI to offset the reduction of official development assistance (ODA).
It is estimated that Vietnam needs US$9-10 billion in FDI per year in 2011-2012, US$13-14 billion in 2014-2015 and USS$21-22 billion in 2019-2020.
Vietnam can achieve these targets if it continues to improve its business environment by perfecting its investment laws, adopting policies that are favourable for investors and enhancing the State’s management of FDI activities.