Manufacturing sector leads in disbursed capital

Foreign-direct investment in the manufacturing and processing sector has disbursed 67.16 per cent of its capital, the highest level compared to other sectors, according to a recent survey of the Viet Nam Chamber of Commerce and Industry.

As of March this year, 7,442 projects out of total 12,500 FDI projects were in the manufacturing and processing sector.

In March, 37 FDI projects received licenses; however, most were small-scale projects with low investment.

Tran Dinh Thien, head of Viet Nam Economic Institute, said FDI projects with low investment capital often had a sluggish technology-transfer process and outdated technology.

Links between 100 per cent foreign-invested companies and domestic businesses were still poor, and as a result, new technology had not spread to local companies.

The reason for ineffective cooperation was partly due to the low capacity of domestic businesses, who often failed to meet FDI-businesses’ requirements.

The latest survey of the Central Institute for Economic Management (CIEM) showed that Fujitsu Viet Nam Co had to import 100 per cent of its components and raw materials.

In contrast, Panasonic Viet Nam Co uses only cartons and packing material made by Vietnamese businesses.

Nguyen Tu Anh said the links between many of these small FDI businesses was poor because they often mad parts for the end of the manufacturing process. This does not require high technology and strong ties with local businesses.

Nguyen Thi Tue Anh, head of CIEM’s Business Environment and Competitive Capacity Department, said no network had been created to link FDI businesses and local companies, even though the FDI companies accounted for a large proportion in the manufacturing sector.

Thien said the licensing of small FDI projects should be done more carefully as it should help develop the domestic supporting industry, he added. — VNS

Tags: Vietnam Manufacturing sector