Officials scratch head over new national approach to boost FDI

By Anh Nguyen - Jul 10, 2018 | 02:33 PM GMT+7

TheLEADERDespite the growth in FDI inflow in recent year, there is a growing realization that Vietnam requires breakthrough reforms to compete for higher quality streams of FDI.

Officials scratch head over new national approach to boost FDI
The scene at the workshop

On July 9, the workshop “Recommendations on Vietnam Next Generation FDI Strategy and Vision 2020-2030” was held by International Finance Corporation (IFC) and the Ministry of Planning and Investment (MPI) in order to provide findings and recommendations to serve as key inputs for the government to develop Vietnam’s new national FDI approach.

“The challenge we face is unique, as record FDI inflows contrast with still limited spillover and value-added benefits," said MPI Vice Minister, Vu Dai Thang.

"We believe the recommendations outlined today will underpin a new national approach to FDI and continue to achievement of national development goals,” he added.

Nguyen Noi, Deputy Director General of Foreign Investment Agency (FIA) under MPI also pointed out several existing weaknesses in FDI attraction of Vietnam. For instance, Vietnam has not been able to create breakthrough in the promotion and use of FDI as compared to other ASEAN countries.

Moreover, FDI management of the State still has many problems such as FDI promotion plan, environmental management, transfer pricing and labor issues.

Accordingly, eight “breakthrough recommendations” were proposed at the workshop. In particular, what needs immediate attention is the establishment of a functionally integrated “next generation Foreign Investment Agency” to lead next generation strategy implementation.

This is because currently there is no institution in Vietnam with the capabilities, staff skills and covening power to conduct investment promotion and effective policy advocacy in line with next generation FDI strategy.

Furthermore, it is urgently required to modernize investment promotion, particularly, a shift is needed from a largely reactive to a highly proactive and targeted FDI promotion approach, including clear sector strategy development and policy advocacy to unlock investment potential.

It is also recommended to implement policies that increase backward linkages from FDI right away. Close linkages allow for technology transfer and the development of domestic industrial capabilities.

Above all, a strong FDI focal point agency with the proper profile, influence, organisational structure and budget is essential to assuring effective implementation of all these recommendations.