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Overcoming shortcomings (19/02)
19/02/2013 - 21 Lượt xem
FDI disbursement did not reach 50 percent of registered capital
Minister of Planning and Investment Bui Quang Vinh said that FDI disbursement was a measurement of FDI attraction. However, for years now FDI disbursement has remained modest, failing to match the amount of registered FDI capital and demand.
Specifically, the Ministry of Planning and Investment said that Vietnam had attracted 14,263 FDI projects with total registered capital of US$208.6 billion. Of this, over US$97.63 billion has been invested, accounting for 47.2 percent of all registered capital.
Vietnam disbursed only US$4.1 billion or 34 percent of all
US$12 billion in FDI registered capital in 2006; US$8.03 billion, 37.5
percent and US$21.34 billion in 2007; US$11.5 billion, 17.9 percent and
US$64 billion in 2008; US$10 billion, 43.2 percent and US$23.1 billion
in 2009; US$11.5 billion, 61.8 percent and US$18.6 billion in 2010;
US$11 billion, 74.8 percent and US$14.7 billion in 2011; and an
estimated US$10.5 billion, 80.7 percent and US$13 billion in 2012.
This shows that although FDI disbursement has improved in recent years and the division between registered and disbursed FDI capital has been bridged since 2010, the highest FDI disbursement of capital reached just US$11.5 billion.
Although only 47.2 percent of registered FDI capital was disbursed, the FDI sector created 2.1 million direct jobs and 3-4 million indirect jobs and contributed 19 percent to the Gross Domestic Product (GDP) growth. The remaining over 50 percent of registered FDI, which has not been disbursed, means that Vietnam missed a major opportunity to take tremendous advantage of the FDI sector.
Slow FDI disbursement has also reduced investment attraction and disheartened foreign investors. Perhaps this is the reason why FDI flows to Vietnam have reduced in recent years and why it is urgent to overcome these shortcomings.
Overcoming shortcomings
To resolve FDI disbursement problems it is needed to understand the reasons why FDI disbursement has been slow.
Major reasons for the shortfall continue to include under-developed infrastructure, incomplete institutions and unqualified human resources.
Bui
Quang Vinh said that despite strong investment in recent years,
Vietnamese infrastructure remains inadequate, particularly in terms of power, water, transport, seaport systems and infrastructure outside industrial zones. Although the legal system has been improved in the last
25 years, legal regulations on FDI remain incomplete, non-transparent
and sometimes contradictory, resulting in misunderstanding and
difficult application. While workforce numbers are strong, they remain unqualified, untrained and unable to meet the needs of FDI businesses, particularly high-tech enterprises.
Increasing FDI influence
Asian
Development Bank Country Director for Vietnam Tomoyuki Kimura said that
infrastructure was an important factor and a foundation for economic
growth and increased trade and investment. For this reason, to improve
FDI effectiveness and absorbability Vietnam needs to facilitate PPP
(public-private partnership) infrastructure improvement projects to make the most of private capital for infrastructure development and to attract and effectively use FDI capital.
Apart from infrastructure, the legal system is a vital factor for increasing Vietnam's attractiveness and competitiveness in the eyes of international
investors. Stable and consistent laws and policies would also help
facilitate investment projects and reduce costs and time for investors,
according to Do Nhat Hoang, the Head of the Foreign Investment Department.
Kwon Kyoung Doug, the Deputy Director of the KOTRA Office in Hanoi, said that to attract many major investors and quality FDI capital, the Vietnamese Government needed to apply long-term and stable policies to make investors confident of doing in Vietnam.
Vietnam has a population of almost 90 million, of which over 50 percent are of working age. However, the country has not been able to make best use of this workforce to attract FDI capital. The quality of the workforce continues to remain a hot topic at the annual Vietnam Business Forum.
Admitting to the low quality of the Vietnamese workforce, Pham Thi Hai Chuyen, Party Central Committee member and Minister of Labor, Invalids and Social Affairs, said that one of strategic tasks for Vietnam in the time to come was to increase the ability
to attract foreign investment, particularly investment from developed
countries. For this to happen, Vietnam needs to bring into play its
advantage including the labor market. It is also crucial to boost the development of technology and application of science and technology, to restructure the economy and to change the growth model for rapid, effective and sustainable development.
Inadequate
infrastructure, inconsistent policies and laws and an under-qualified
workforce are three major 'bottlenecks' that have together reduced the attractiveness of the Vietnamese investment environment in recent years. At the 2012
Consultative Group meeting experts once again underlined that Vietnam
should no longer rely on its cheap labor and natural resources to
attract FDI. This means that it is important to improve infrastructure,
institutions and the workforce to facilitate FDI, to sharpen the country's competitive edge and make the most of its strengths. By doing so, Vietnam can change its development model from width to depth and increase positive impacts of the FDI sector./.
Source: VEN
Source: VEN
