(MPI) - On October 4th, 2018, in Hanoi, the Ministry of Planning and Investment, in collaboration with ministries, branches and localities, held a Conference for 30 years of Foreign Direct Investment (FDI) attraction. This is a national level conference with the participation of more than 3,500 representatives from ministries, branches, central and local agencies, embassies, representative diplomatic offices, international organizations, specialists, scientists, associations, foreign and domestic investors, many large corporations over the world and press agencies. Prime Minister Nguyen Xuan Phuc attended and had a speech at the Conference.
Minister of Planning and Investment Nguyen Chi Dung speaking at the opening of the Conference. Photo: MPI
FDI plays an increasingly important role and has contributed significantly to the socio-economic development of the country
Speaking at the opening of the Conference, Minister of Planning and Investment Nguyen Chi Dung said that since 1987, in parallel with the process of reform and openness of the economy, the Foreign Investment Law had been promulgated. From that right guideline, through 30 years of development, until now, the economic sector with foreign investment capital has been playing an increasingly important role and contributing significantly to the socio-economic development of the country.
As of August 2018, there were more than 26,500 FDI projects, with registered capital of more than 334 billion USD, realized capital of about 184 billion USD. FDI contributed nearly 20% of GDP and is an important supplement capital source for development investment with the proportion of about 23.7% of the whole society's total investment capital; 58% of the total FDI capital focus on the processing and manufacturing sector, creating more than 50% of the country's industrial production value, export turnover of the FDI sector makes up an increasingly growing proportion of exports, reached 72.6% in 2017 and 71.4% in the first nine months of 2018; the amount of remittances to the state budget of the foreign investment sector has increased steadily over the years, reached over 8 billion USD in 2017, accounting for 17.1% of the total state budget revenue. Up to now, the FDI sector has created nearly 4 million direct jobs and about 5 million indirect jobs.
In economic terms, foreign investment plays the role of one of important driving forces in boosting Vietnam's economic growth. The contribution of the foreign investment sector to the GDP of the country increased from 9.3 % in 1995 to 19.6% in 2017.
The foreign investment sector has contributed significantly to the development of the high-quality services sector in Vietnam over the past years, such as finance - banking, insurance, audit, maritime transport, logistics, education and training. At the same time, it is also a factor contributing to the transformation of the development space, the formation of new urban areas, industrial parks, export processing zones and economic zones.
Foreign investment also creates favorable conditions for Vietnam to expand its international market, increase its export turnover, gradually participate in the global production network and value chain. Because of this orientation, exports of the foreign investment sector have increased rapidly in recent years, contributing tremendously to balancing the trade balance, reducing exchange rate pressures and enhancing the international balance of payments.
In the past 30 years, various foreign investment projects have transferred advanced technology and management experience in some sectors and fields and have some certain spillover effects on the domestic enterprises, thereby contributing to the improvement of technology and governance of the economy.
In the social field, the foreign investment sector has made various contributions in creating jobs, restructuring the labor force and improving the quality of human resources. Number of direct jobs in the foreign investment sector have increased from 330 thousand in 1995 to approximately 3.6 million in 2017, and indirect jobs to approximately 5 - 6 million. Foreign-invested enterprises are also pioneer units in training, improving the knowledge and industrial manners of workers, technicians and managers. Many positions which were employed previously by foreign experts have now been replacing by Vietnamese employees. Many foreign-invested enterprises have paid attention to the social responsibility to the community, participated in hunger eradication, poverty alleviation and other volunteer activities.
In addition, the attraction and use of foreign investment have contributed positively to the completion of the market economy institution, improvement of the business investment environment, enhancement of foreign relations, international cooperation and integration.
Despite gaining important achievements as mentioned above, the foreign investment sector still has some remaining issues, limitations that needed to overcome. Specifically, the level of connection and spillover effects of foreign investment sector to the domestic investment sector is still low, the technology attraction and transfer from foreign investment sector to domestic investment sector still have not met the expectations. Attracting foreign investment in a number of priority sectors, fields and from multinational corporations is still limited. There still exists the phenomenon of some enterprises transferring price, evading tax or being not serious in implementing regulations on environmental protection. Land use efficiency of many foreign investment projects is not high, etc. The remaining issues, limitations mentioned above have been identified. The Government and related ministries and branches are implementing a number of comprehensive and drastic solutions to overcome these issues in the near future.
Minister Nguyen Chi Dung emphasized that in the coming time, we will prioritize the attraction of foreign investors investing in high and advanced technologies, environmentally-friendly technologies, clean and renewable energy, manufacture of medical equipment, provision of health care services, etc. especially new business lines based on the industry 4.0, ensure the harmony between export growth and investment for developing products and services with added value and the usage of domestic materials, development of auxiliary industries, training of human resources in the country, etc.
In addition, it is necessary to complete mechanisms and policies to create new motivation for attracting and using foreign investment in industrial parks, export processing zones, economic zones and hi-tech parks. Regarding the market, partners, we need multi-lateralisation, diversification of foreign investment attraction from potential markets and partners, concentration on transnational corporations that held the source and advanced technology, modern management, etc.
Representatives attending the Conference. Photo: MPI
Vietnam: A reliable and effective investment destination as evaluated by foreign investors
Speaking at the Conference, Prime Minister Nguyen Xuan Phuc highly appreciated the Review Report of 30 Years of Foreign Investment, he especially praised the Ministry of Planning and Investment for organizing a Review Conference associated with national investment promotion activities, along with many additional activities such as the exhibition of achievements 30 years of foreign investment, the program to connect domestic enterprises and foreign investors, and the meeting between investors and central ministries and branches.
The 30 years review shows that the opening for the attraction of foreign investment is a right guideline contributing to the implementation of the country's various important socio-economic development goals. The economic reforms had started in 1986, then the National Assembly promulgated the Law on Foreign Investment in December 1987. Therefore, we can say that attracting foreign investment is always "in parallel" with the reform and is a vivid concretization of the "openness" of the country. The foreign-invested sector has become an indispensable part of the Vietnamese economy. Until now, more than 26,500 foreign investment projects from 129 countries and territories have committed to invest over 334 billion USD in Vietnam.
Vietnam has become a reliable and effective investment destination as evaluated by foreign investors. According to the World Trade Organization's 2017 report, Vietnam is among the top 12 most successful countries regarding attracting foreign investment, Prime Minister Nguyen Xuan Phuc said.
Despite being happy with the gained great achievements, Prime Minister Nguyen Xuan Phuc said that we also need to look directly at the existing limitations, the losses in attracting foreign investment. Foreign-invested enterprises are basically using advanced-medium or medium technology as compared to the region. The number of transnational corporations in fields using high technology, source technology and the proportion of enterprises investing in research and development is still low.
In addition, the linkage between the foreign-invested sector and domestic sector, the technology transfer has not yet met the expectations, mainly are processing and assembling, the localization rate in some sectors is low, the value-added per product is not high, some foreign investment projects are energy and resources consuming, causing environmental pollution, also showing losses statement - transfer pricing, etc. The quality of human resources, infrastructure is still inadequate, state management regarding foreign investment is still lack of coordination from central to localities.
In general, there are still some limitations that need to overcome, but in overall, the foreign investment sector is an organic component and a companion of the Vietnamese economy, growing along with the socio-economic development process of the country. Foreign-invested enterprises are active members of a large family of Vietnamese enterprises. Vietnam is self-confident and continues to consistently implement policies of foreign investment cooperation, Prime Minister Nguyen Xuan Phuc affirmed.
Currently, Vietnam is strengthening macroeconomic stability, restructuring the economy in combination with reforming the growth model, enhancing productivity, quality and efficiency. The view of attracting foreign investment will be directed toward consistently affirming that the foreign-invested sector is always an important part of the economy. After 30 years of attracting foreign investment, Vietnam is now implementing the policy of "foreign investment cooperation" with a broader comprehension. Foreign investment cooperation is the cooperation in terms of management, connection, investment in the form of acquisition and mutual merger, especially emphasize on cooperation for the protection of the environment, labor, and social benefits assurance. Foreign investment cooperation is active, equal, choice, gradually gets out of only processing, assembling, also enhancing the level of production and the autonomy of the national economy.
Vietnam wishes for the investment cooperation to deliver cooperation effectiveness for both investors, the State, the society and environment protection; along with that, to boost the attraction of domestic investors to connect with foreign investors. Based on the state of the country, we continue to attract foreign investment capital to solve labor and employment issues in rural and mountainous areas. As of developed cities and towns, priority is given to attracting investment in advanced and high technology, etc. This is the humanistic view of covering sustainable development, sharing development achievements with the people, Prime Minister Nguyen Xuan Phuc shared.
Prime Minister Nguyen Xuan Phuc speaking at the Conference. Photo: MPI
At the Conference, the Prime Minister asked the ministries, branches and local governments to focus and determine to achieve what the investors always need, which is to maintain social and macroeconomic stability. This is not easy, requires the unification of ideas, awareness of foreign investment cooperation and the synchronous and creative implementation of economic, social, security, national defense and foreign affairs measures, the completion of the legal framework related to investment, including the implementation of the guideline of foreign investment cooperation with priorites and choices with the aim of raising the level of the economy and building a self-governing economy.
At the same time, it is necessary to encourage and support domestic enterprises to joint ventures and partnerships, contribute capital, purchase shares or contributed capital of foreign-invested enterprises in projects using high and new technologies, supporting industries, etc. From passive thinking of "being bought" by foreign investors, now we must turn to active thinking that domestic enterprises can "buy back" foreign-invested enterprises in Vietnam to acquire market and distribution channels, master technology, manage and develop national products.
Also, it is needed to complete policies of preference, investment encouragement based on the principle of linkage with the inspection and supervision mechanism to ensure that foreign-invested enterprises comply with investment commitments and preferential conditions; create a mechanism to link promotion activities in investment, trade, and tourism to enhance the effectiveness of promotional activities; enhance the efficiency and effectiveness of the State management, complete the mechanism of assignment and decentralization of State management over foreign investment among central agencies and localities.
Prime Minister Nguyen Xuan Phuc requests ministries, branches and localities to review, complete and supplement mechanisms, policies and solutions in fields within their management, the Ministry of Planning and Investment to complete the Report to Review 30 Years of Attracting Foreign Investment and submit it to the Government and report to the Politburo for promulgation of a new Resolution on Orientation for Completing Institution and Policies, Improving Quality and Effectiveness of Foreign Investment Cooperation to 2030. On that basis, the Government promulgates a specific Action Program to improve further the attraction of foreign investment.
On this occasion, Prime Minister Nguyen Xuan Phuc expressed his gratitude, highly appreciated the foreign investors who trust, select, accompany and grow with Vietnam, and have worked with us to overcome difficulties and practically and effectively contribute to the development of Vietnam throughout the past 30 years.
The Government of Vietnam is consistent and committed to continue implementing guidelines and policies for foreign investment cooperation and commit to building a more and more favorable and competitive investment environment, asymptotic to advanced international standards and in line with the high standard commitments of the new generation of FTAs that Vietnam participates in. The Government is always listening and accompanying with investors to cooperate for mutual benefit and sustainable development. The success of foreign investors in Vietnam is also our success, our pride, Prime Minister Nguyen Xuan Phuc affirmed./.
Ministry of Planning and Investment