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(VEN) - Due to the global financial crisis, there has been a significant decline in foreign direct investment (FDI) in Vietnam. It is predicted that FDI will recover this year across the world and Vietnam will be able to increase FDI in the country. However, Vietnam should be selective in its acceptance of FDI to ensure quality growth.
Foreign investors are modifying their business strategies to adapt to the post-crisis environment. This has affected ongoing projects and deals that are being negotiated. However, Vietnam will continue to attract foreign investors in the long term. While the number and the amount of registered capital in FDI projects was worth US$21.48 billion (30 percent lower than in 2008), invested capital amounted to US$10 billion (13 percent lower than in 2008). There have also been changes in investment fields. In 2008, most FDI projects were in the industrial sector, which had 912 projects worth US$35.6 billion that accounted for 58.6 percent of the total projects in the country and 53.4 percent of the total capital invested. In 2009, a majority of the investment capital was put into the service sector, particularly in real estate, hotels and food services. Vietnam gave licenses to 498 projects in the service sector with a total registered capital of US$13.2 billion in 2009, which represented 59.3 percent of all projects and 81.2 percent of the total FDI capital invested. Meanwhile, there were 325 industrial projects worth US$3 billion last year, which accounted for 38.7 percent of all the projects and 18.3 percent of the total FDI capital.
| A report released at a UNCTAD meeting earlier this year shows that Vietnam is one of 15 countries that have been recognized as having an attractive investment environment and an attractive FDI destination in 2010. It is predicted that foreign investors in Vietnam will make about US$19 billion in newly registered capital and about US$3 billion in supplementary capital this year. |
Nguyen Mai, the chairman of the Vietnam Foreign Investment Association, said that the service sector is increasing its percentage in the global market. In developed countries, the service sector normally accounts for more than 50 percent of the economy. In Vietnam, opening the service market for foreign investors will make it more possible to diversify and improve the quality of development in the service sector. A strong service sector will contribute to a larger economy, added value and the competitiveness of Vietnamese commodities. The growth and development of the service sector will make Vietnam more attractive and more competitive, which will help attract FDI in other economic sectors.
The Ministry of Planning and Investment said that it would direct the flow of FDI to important sectors in 2010, which will help support industry, infrastructure and human resources. Other prioritized areas include the agricultural processing sector, services with high added values, energy-efficient production sectors and industries with high exports. For this to happen, local authorities will play an important role as they have been given much more power to grant investment licenses. To receive beneficial FDI, it is necessary to renew and improve investment promotion activities, with a focus on partners that are transnational groups that have source technology and that respect environmentally-friendly projects.
Apart from selecting and improving the efficiency of investment projects, FDI in 2010 must closely follow the economic restructuring plan and be directed to specific sectors to facilitate economic restructuring and utilize this source of capital. There is a need to make an overall plan to attract FDI in order to keep up with regional and sector plans.
Now that the economic crisis is ending, many countries have begun to restructure their economies by developing technologies that are able to create a shortcut to growth with high profits. It is important to accurately monitor world FDI trends and modify strategies to attract FDI in Vietnam. For example, FDI in sensitive sectors that have taken a beating such as automobiles, chemicals and metal will not be lucrative this year.
In the meantime, high-quality FDI projects will go to countries with favorable investment environments. For this reason, Vietnam needs to create a better investment environment by intensifying administrative reforms, improving and upgrading infrastructure and reforming the education-training system to meet the need for high-quality manpower./.
My An
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