FDI machine needs reworking (24/7)
24/07/2012 - 13 Lượt xem
Scaling-up efforts to improve foreign direct investment (FDI)
flows into Vietnam is increasingly seen as vital when it comes to
attracting the capital inflows. This is one of must-do tasks to enhance the level of responsibility in state management when executing laws and policies relevant to FDI.
During the drafting process of the Foreign Investment Law in 1987, the task of hi-tech transfer through absorbing FDI inflows was seen as crucial. Since then, attracting and receiving cutting-edge technologies was a task of top importance through diverse Foreign Investment Law revised versions in 1990, 1992, 2000 and 2005 (now the Investment Law 2005).
The practice of attracting and managing FDI in the past years shows that parallel to projects satisfying hi-tech standards, many low-tech FDI projects wormed their way into Vietnam. They have hurt the business environment and the quality and reputation of made-in-Vietnam products. These projects also dampened the image of Vietnam’s investment climate in the global stage, while undermining economic efficiency.
Let’s look at the country’s FDI picture in 2012’s first six months. Albeit total disbursed amount in the first six months reaching $5.4 billion, higher than 2011’s same period, the newly committed fund just amounted to $4.67 billion, shedding 24.6 per cent and expanded capital of existing foreign invested enterprises (FIEs) plunged 35.5 per cent on-year.
This reflects slowing FDI flows into the country. Thereby, stopping FDI downward trend whereas bettering its quality in the coming period becomes an imperative and also the responsibility of the state management agencies at all levels.
To come up on par with this requirement, the responsibility of each staff in the state management agencies is crucial as if each of them must cut red tape and help Vietnam attract more FDI.
Their effective performance also helps management authorities select FDI projects that fit investment orientations and approved planning schemes and avoid unsuitable projects from jumping into the country.
However, the big question is how to access high-tech and genuine foreign investors. What state agencies are responsible for this?
May be, taking care of big existing investors like Intel, Canon, Samsung, Honda, Toyota and Ford is of foremost importance to enable them to expand production and business in Vietnam. That would be a good approach. Some big investors have recently relocated their plants from Vietnam to other nations like in the recent case of US’ First Solar (having its $1 billion investment project licenced in Vietnam), which serves as clear and painful lessons to relevant management state agencies.
In the second half of 2012, some issues must be addressed including the approval and introduction of a revised decree to replace Decree 108/2006/ND-CP guiding the implementation of the Investment Law 2005. The final revised draft was already completed by the Ministry of Planning and Investment and submitted for prime ministerial approval.
A series of other issues need to be ironed out such as transfer pricing or loans of foreign invested enterprises at local credit institutions. Another issue is FIEs’ re-registration, regulated in the Enterprise Law and Investment Law 2005. This issue has yet to receive due attention from state management agencies.
Before the threshold of 2012, the prime minister enacted Instruction 1617/CT-TTg dated September 19, 2011 fostering implementation and revising FDI investment management activities. The premier assigned explicit tasks and deadlines for implementation in 2012’s third quarter to relevant governmental agencies, ministries, and management agencies in cities and provinces nationwide.
Source: VIR
During the drafting process of the Foreign Investment Law in 1987, the task of hi-tech transfer through absorbing FDI inflows was seen as crucial. Since then, attracting and receiving cutting-edge technologies was a task of top importance through diverse Foreign Investment Law revised versions in 1990, 1992, 2000 and 2005 (now the Investment Law 2005).
The practice of attracting and managing FDI in the past years shows that parallel to projects satisfying hi-tech standards, many low-tech FDI projects wormed their way into Vietnam. They have hurt the business environment and the quality and reputation of made-in-Vietnam products. These projects also dampened the image of Vietnam’s investment climate in the global stage, while undermining economic efficiency.
Let’s look at the country’s FDI picture in 2012’s first six months. Albeit total disbursed amount in the first six months reaching $5.4 billion, higher than 2011’s same period, the newly committed fund just amounted to $4.67 billion, shedding 24.6 per cent and expanded capital of existing foreign invested enterprises (FIEs) plunged 35.5 per cent on-year.
This reflects slowing FDI flows into the country. Thereby, stopping FDI downward trend whereas bettering its quality in the coming period becomes an imperative and also the responsibility of the state management agencies at all levels.
To come up on par with this requirement, the responsibility of each staff in the state management agencies is crucial as if each of them must cut red tape and help Vietnam attract more FDI.
Their effective performance also helps management authorities select FDI projects that fit investment orientations and approved planning schemes and avoid unsuitable projects from jumping into the country.
However, the big question is how to access high-tech and genuine foreign investors. What state agencies are responsible for this?
May be, taking care of big existing investors like Intel, Canon, Samsung, Honda, Toyota and Ford is of foremost importance to enable them to expand production and business in Vietnam. That would be a good approach. Some big investors have recently relocated their plants from Vietnam to other nations like in the recent case of US’ First Solar (having its $1 billion investment project licenced in Vietnam), which serves as clear and painful lessons to relevant management state agencies.
In the second half of 2012, some issues must be addressed including the approval and introduction of a revised decree to replace Decree 108/2006/ND-CP guiding the implementation of the Investment Law 2005. The final revised draft was already completed by the Ministry of Planning and Investment and submitted for prime ministerial approval.
A series of other issues need to be ironed out such as transfer pricing or loans of foreign invested enterprises at local credit institutions. Another issue is FIEs’ re-registration, regulated in the Enterprise Law and Investment Law 2005. This issue has yet to receive due attention from state management agencies.
Before the threshold of 2012, the prime minister enacted Instruction 1617/CT-TTg dated September 19, 2011 fostering implementation and revising FDI investment management activities. The premier assigned explicit tasks and deadlines for implementation in 2012’s third quarter to relevant governmental agencies, ministries, and management agencies in cities and provinces nationwide.
Source: VIR
