It seems to be true if we look back on foreign direct investment FDI attraction into Vietnam several years ago. The peak year was in 2008 when Vietnam allured 1.171 FDI projects with total registered capital of US$64 billion, an increase by threefold compared with 2007.

However, this figure has been on the decline in recent years, registering US$21.48 billion in 2009, US$18.1 billion in 2010 and US$14.69 billion in 2011. In the first two months of 2012, total FDI capital poured into Vietnam reached US$1.23 billion, accounting only 45.5 percent compared with the same period last year.

Chainarong Limpkittisin said that Vietnam used to be an attractive destination to investors in Asia but now there are many emerging "stars" such as Myanmar and Indonesia.

Therefore, if Vietnam wants to promote investment attraction, it needs to create a competitive investment environment, focusing on releasing preferential policies on taxes and land, upgrading the infrastructure network and training high-quality labor force. It could take a lot of time to achieve this goal and if Vietnam does not start the work right now, it will only be second or third choice of investors.

One of the knots that hinder foreign investment in Vietnam in recent times is the underdeveloped support industries, which cause concerns to investors as they have to import too many accessories from abroad for production in Vietnam. This is a disadvantage factor that keeps Vietnam economy undeveloped.  Proof showed by Chainarong supports this view: Honda Vietnam produces 1.5 million units every year and the motorbike market in Vietnam is quite developed. However, the more motorbikes Vietnam sells, the more accessories Thailand will export to Vietnam. Therefore, Vietnam has to develop support industries if it aims at attracting more foreign investment in the future. Chainarong added that, Vietnam needs to specify its strong and advantaged industries and sectors to attract foreign investment, rather than spread investment attractions.

He also revealed that in April 2012, to increase foreign investment in high-tech industries, the Government of Thailand will raise labor wages by 37 percent, which will cause difficulties for labor-intensive sectors to attract more investment in the country. Therefore, some enterprises that need a large number of laborers may shift to other neighboring countries such as Myanmar, Laos, Cambodia and Vietnam. By releasing this policy, Government of Thailand affirms that it will not welcome foreign investment in labor-intensive industries such as garment and textile and footwear. How about in Vietnam?

The story of Doctor Michael Porter from Harvard (the US) when he came to Vietnam in 2010 also suggested that it is time that Vietnam needs to change views on comparative advantages and it can not rely on available factors such as cheap labor, which might have made it less attractive to foreign investors./.

Source: VEN