After 30 years, FDI still pays dividends for VN

05-Oct-2018 Intellasia | VNS | 6:00 AM Print This Post

It has been 30 years since Vietnam promulgated the Law on Foreign Investment on December 29, 1987. This was an important milestone that made it possible for Vietnam to open up its economy and integrate with the world.

Many global leading companies have entered Vietnam, such as Coca-cola, Intel, Canon, Samsung, Toyota, FedEx and others. More importantly, most of these corporations are looking to expand business here in the long run.

A World Bank expert and representatives from foreign direct investment (FDI) enterprises, including Coca-cola and Canon, have made comments on the country’s 30 years of progress in attracting FDI

Sebastian Eckardt, World Bank’s Lead Economist for Vietnam

Vietnam has been quite successful in attracting FDI ever since the country opened up to foreign investment. If we look at the impact, we can say that FDI has really contributed in various ways, including industrialisation, where a lot of investment went into the manufacturing sector, building capacity across a range of sectors including electronics, but also more traditionalised industries such as garment and shoe factories, and so on.

It also contributed to increase Vietnam’s exports and create jobs with higher productivity and better incomes. So I think it’s a very successful part of Vietnam’s overall economic development over the last three decades.

Vietnam is definitely one of the leaders in the region in terms of FDI attraction if you look at FDI as a share of GDP. Now what is important to note is that a lot of this investment is currently flowing into labour-intensive but relatively low-skill industries, or final assembly. Vietnam is competitive in one particular part of the value chain where the value-added per worker is relatively low, because a lot of the components are imported.

I think there is still more on the agenda in terms of moving to the next level of attracting different types of FDI, diversifying across the value chain and particularly moving into the higher-value component of the value chain, being R&D or downstream like marketing and brand development. That would add a lot more value and would generate higher benefits for the economy.

Vietnam is not underperforming but it needs to continue to become more competitive, which means investing in skills and well-connected infrastructure (port, roads, rail and transport network) because how quickly you can import and export goods is absolutely critical in the value chain.

We know that technological progress is of course a good thing, and like the other industrial revolutions it will actually improve life for millions of people, but it is important to prepare people with the right skills so they can find jobs and productive employment that complement these technologies rather than compete with technology. So I think investing in good education, especially science-technology and math education, is important because those are really the skills that I think will be in demand in the future.

Sanket Ray, general director of Coca-Cola Vietnam

Vietnam continues to attract a lot of foreign investments, as the local economy continues its growth and good performance.

As a foreigner investor in Vietnam’s beverage sector, we really appreciate the support from the Vietnamese government since our first day of operations. The support of policies and the investment environment for FDIs allows us to continue our mission of sustainable development and bring more quality products to consumers as well as conduct our community support.

We believe that foreign investors should be further supported by Vietnam with more stable and consistent legal policies. With regard to supply chain issues, we also look forward to the improvement of Vietnamese enterprises in technology and products innovation, as we look forward to integrating them into our local supply chain.

In order to strengthen the linkage between FDI enterprises and domestic enterprises, we need to build the support of and commitment from both parties.

Vietnamese enterprises must upgrade their technology and absorption capacity to improve their capacity. Foreign enterprises should actively create favourable conditions for Vietnamese enterprises to have a chance to increase their participation in the value chain.

Currently, there are more than 500,000 small and medium enterprises (SMEs) operating and contributing significantly to the overall economy of the country. However, SMEs still face many challenges and need support to upscale their operations, leverage technology and develop their human resources and management skills.

Vietnamese enterprises must actively connect and change the technology as well as develop their human resources and management skills and products to meet the requirements of FDI enterprises.

Keisuke Taniguchi, deputy senior general manager of Administrative Centre, Canon Vietnam

We highly appreciate the efforts of the Vietnamese government in improving the business and investment environment. In particular, the government has recognised and abolished some administrative procedures that save time and money, such as taxation, e-customs and social insurance.

The government should have policies to ensure laws and institutions are stable so that businesses can rest assured of production, while at the same time training and nurturing human resources to provide a stable and high-quality workforce for businesses.

As for technology transfer, we have been transferring technology to suppliers in Vietnam. However, there is not much and only in the form of potential because actually, the suppliers of Vietnam are yet to have a big enough vision for us to transfer technology.

In the coming time, with the trend of the Industry 4.0, Vietnam needs to have a new FDI attraction orientation to prepare for this revolution. FDI enterprises are expecting and planning to build 4.0 factories to limit the risks of increasing labour costs. Therefore, Vietnam needs a high quality human resource training system ready for this.

In fact, modern machines are used in production but without human control, the system is not operating perfectly. If there is high-skilled workforce, Vietnam can expect to be able to develop in the 4.0 economy. We look forward to the Vietnamese government working together with the business community in their efforts to increase their productivity.


Category: Economy, Vietnam

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