Vietnam to follow four main principles in attracting FDI

The new policy on attracting foreign direct investment (FDI) will be set up based on four main principles. The FDI projects must have high quality and efficiency. They must aim to the sustainable development on the basis of the low-carbon economy. Especially, foreign investors have to make commitments on technology transfer and help train high qualification labor force.

The four principles have been proposed by Dr Nguyen Mai, Chair of the Vietnam Association of Foreign Invested Enterprises VAFIE.

Mai said at a workshop reviewing the efficiency of foreign investment and discussing the solutions to speed up the disbursement, that the disbursement rate in the last five years has been stable at 10 billion dollars per annum. The disbursement rate was kept even in the most difficult period of 2011. This shows that the investment environment and the Vietnamese policies to attract FDI remain attractive to foreign investors.

However, Manh said that in attracting FDI, Vietnam needs to shift from Asian small and medium enterprises to multi-national economic groups of Japan, the US and the member of countries of OECD. This aims not to lag behind the world when implementing all the WTO’s commitments and the commitments within the framework of the free trade area with ASEAN, China and Japan from 2012, and in order to avoid becoming a “technology rubbish dump” of the world.

“In the new period of development, Vietnam needs to prioritize to attract high technologies industries, advanced services which allow to create breakthroughs in technologies and help improve the competitiveness of the country.

If Vietnam applies new technologies in making steel, it can save 40 percent of the energy and reduce 50 percent of carbon emission. The figures would be 35 and 25 percent for cement production, 80 and 60 percent for printing paper and pulp production.

Vietnam also needs to restrict the labor intensive FDI projects such as garment and footwear, while giving places for domestic enterprises to develop the industries. As for big FDI projects, which need high quality workers, Vietnam needs to make commitments with foreign investors in terms of the quantity and quality of workers to be provided.

Agreeing with Dr Mai, Nguyen Noi, Deputy Head of the Foreign Investment Agency, a unit of the Ministry of Planning and Investment, said that a lot of problems have arisen from the foreign invested projects. A lot of investors do not have the awareness of protecting the environment, while many projects use backward technologies. Especially, strike remains a headache.

According to Noi, the Prime Minister has assigned MPI to compile the plan on reviewing the situation of the foreign invested sector and suggest the methods to upgrade FDI in 2011-2020, which needs to be submitted to the Prime Minister by the second quarter of 2012.

MPI plans to request local authorities to refuse the projects which may cause environment pollution, and the ones which have small investment capital but use large areas of lands. The projects, which do not bring high efficiency, but use a lot of natural resources, backward technologies which consume much energy will be refused to give places to the projects that use high and clean technologies, the projects in the supporting industries.

Le Tuyen Cu, Deputy Director of the Economic Zone Management Department of MPI, said that the tax incentive policies need to be adjusted to meet the requirements in the new period of attracting FDI.

Under the current laws, only some business fields can enjoy the highest preferential levels (the corporate income tax of 10 percent for 15 years).

According to MPI, to date, Vietnam has attracted 13,496 FDI projects with the total registered investment capital of 195.9 billion dollars. Of these projects, 65 percent have seen the capital contribution completed.

Tags: invest in Vietnam, Vietnam FDI, Vietnam FDI 2011, Vietnam investment