If Vietnam does not have a reasonable set of indications to be used to assess the FDI impacts on the national economy, the country would not know what it needs and what it expects from the investment channel.
Researchers of the Development Policy Institute, an arm of the Ministry of Planning and Investment (MPI) have used a set of indicators, including the ratios of added value on investment capital, the added value on laborers, the added value on the production value, the ratio of foreign invested enterprises’ (FIEs) contribution to the State budget on investment capital, and the ratio of income on investment capital, to rank 10 localities in terms of FDI effects.
The method has provided a surprising result. The locality with the highest FDI effects is Ba Ria – Vung Tau in the south. Meanwhile, the second position belongs to Can Tho city, followed by HCM City and Da Nang.
It’s quite a surprise that Dong Nai, Binh Duong, Hanoi and Bac Ninh, the provinces and cities well known for their FDI attraction achievements, have been put at the bottoms of the list.
Le Trung Thanh, representative of the research team of the project on building up the set of indicators to assess FDI effects, said that the decline in the marks was seen in most of the provinces and cities, when comparing the achievements in 2000-2004 and 2005-2009.
“This shows that the adjustments in the production and business strategies of FIEs have created more negative impacts on localities in particular, and the national economy in general,” Thanh said.
He pointed out that the indicator of added value on labor, which reflects the contribution of FIEs to the productivity, witnessed sharp decreases of over 51 percent in nearly all of the surveyed localities. Especially, the indicator fell dramatically by more than 76 percent in Hanoi, Dong Nai, Binh Duong, Da Nang and Hai Duong.
Meanwhile, the researchers have found that the capital use efficiency (added value on investment capital) also dropped by more than 76 percent in Binh Duong, Da Nang and Bac Ninh, when comparing the indicators in the two above said different periods.
However, the pilot model suggested by the research team could not successfully convince the experts who attended the workshop on the issue held in Hanoi on April 18.
The controversial issue does not lie in the research result announced by the officers of the institute. The low productivity, the problems in technology transfer and the lower-than-expected positive impacts on FDI capital on the national economy all prove to be not the new problems at all. The reports by the Ministry of Planning and Investment and other relevant ministries on FDI situation all have shown the same problems already.
The problem here, according to Luu Bich Ho, former Head of the MPI’s Development Strategy Institute, is that the indicators need to be built up based on the principle about the state management effects and they need to be associated with the policies in different periods.
Vietnam once considered FIEs as the economic sector that created more jobs. Therefore, when measuring the FDI’s effects of that period, it was necessary to find out the number of jobs generated during that time.
Meanwhile, nowadays, Vietnam pays more attention to upgrading of the labor skills and technology, which means that it’s necessary to analyze the labor productivity. Source: TBKTVN