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Quality targeted in foreign investment

Update: July, 05/2012 - 10:23

 

Do Nhat Hoang.
The Ministry of Planning and Investment has released foreign direct investment figures for the first half of this year. Viet Nam News reporter Vu Hoa talked with Do Nhat Hoang, director of the ministry's Foreign Investment Agency about attracting FDI.

The ministry says FDI inflows into Viet Nam in the first six months is sharply down on the same period last year, raising concerns that the target of mobilising US$15-17 billion FDI this year would be hard to reach. Can you elaborate and what are the solutions?

I think the Government predicted factors both inside and outside the country when setting the target. However, there were still unforeseen circumstances which could affect FDI mobilisation, not only for Viet Nam but also the world. We should have a more pragmatic view of decreasing FDI inflows. The downward trend in FDI is because Viet Nam has targeted high quality inflows. FDI quantity is being reduced in the short term to improve the quality. It would be hard to increase both quality and quantity in an global economic downturn. We forecasted the figures in the first half of the year. In the period, registered capital was $6.4 billion compared with $8.83 billion over the same period last year. FDI disbursement was $5.4 billion while that of the corresponding period last year was only $5.3 billion. In 2010, the figures were $10.5 billion and $5.4 billion respectively. It meant that the disbursement this year was the same as 2010, despite there being less registered capital. In addition, we have improved the investment structure. FDI in the manufacturing industry increased from 64 per cent in the first half of 2011 to 65.3 per cent during the same period this year. Meanwhile, FDI in the service sector fell slightly from 35 to 34 per cent while the agricultural sector rose from 0.4 to 0.9 per cent.

What are your predictions about the FDI trend and disbursement in the second half of the year?

I have seen the maintenance of registered investment and capital structure. FDI inflows in May and June were stable. In May, registered capital was $5.4 billion and disbursement was $4.5 billion. Last month, those figures were $6.4 billion and 5.4 billion respectively. FDI mobilisation and disbursement targets this year would be achieved if the world's economy had not undergone a remarkable change and the Government and ministries had continued to implement supporting packages and solutions. FDI disbursement would reach $7-10 billion in the second half.

A recent report showed that FDI inflows in Thailand and Indonesia in the first half of the year increased 20-30 per cent while those in Viet Nam reduced. Viet Nam targeted high quality FDI while FDI had poured into the other two countries. What should we do to attract high quality FDI inflows?

We have met with several investors who shifted their investment from Thailand to Viet Nam. Investors have also shifted from China to other countries, including Viet Nam. As for Indonesia, the country has attracted high quality FDI inflows. We should learn from their experience to improve our competitiveness.

The ministry has been collecting ideas from ministries on the draft circular to "supervise" FDI enterprises. Several business leaders are worried they could be checked at any time, causing problems to their operations. What are your comments?

The Government has introduced regulations on inspections and check-ups at businesses. We have collected ideas for a circular on supervision. The circular would stipulate contents and times of supervision. Enterprises could think that the regulation would cause inconvenience to their operations. However, if we have a careful and overall view, it could make the investment environment more transparent. In the draft, we plan to carry out annual supervisions and will inform enterprises. Unexpected supervisions would depend on violations discovered. The supervisions could help FDI firms operate more effectively under the legal framework. The investment environment therefore would be improved, creating favourable conditions for others. I think when the circular becomes official it will be a good sign to prevent negative phenomena.

When would the circular be declared official?

We have collected ideas from ministries, localities and businesses. We expect that it will be submitted to the Government to make it official by the end of this year. — VNS

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