Chairman of the Viet Nam Association of FDI Enterprises Nguyen Mai talked to Ha Noi Moi (New Ha Noi) newspaper about the past and future of foreign direct investment in Viet Nam.
Can you identify any major achievements in attracting foreign direct investments in the past 30 years?
Figures from the Ministry of Investment and Planning showed that valid foreign direct investment registered nationwide as of July amounted to US$242 billion. What is important about this figure is that it accounts for 25 per cent of the nation's total investment capital. It is also important because it helps establish new leading industries for the country like oil refinery, automobile manufacturing and chemicals.
Do you think that in previous years, Viet Nam wasted many opportunities to attract FDI because of complicated administrative policies and procedures?
Maintaining the same policy for attracting FDI for too long was our biggest shortcoming. In the beginning, our policy was to attract FDI in all fields, even in projects with investment capital worth $100,000.
About 10 years ago, we began developing better potential but were slow in changing to new policies. We still focus more on the quantity rather than the quality of FDI projects.
I think the reason for this is that the administration has not caught up with reality. It is also true that administrative procedures are still complicated and lengthy. Recently, the Prime Minister has ordered that administrative procedures in the tax sector and customs procedures be cut down to the same level as that of other ASEAN member countries by 2015.
You have cited shortcomings in the distribution of the authority to examine and issue licenses for FDI projects. Can you elaborate on this?
Many provinces and localities have been too lax about issuing licenses to FDI projects and have failed to consider the feasibility of such projects. There have been projects worth $4 billion to $5 billion that were suspended just a few months after local authorities approved them. This has seriously affected the image of Viet Nam's investment environment among international investors.
We should never pass on the right to choose what projects are good for the country. We respect investors who want to do business in Viet Nam, but we should refrain from attracting them using all means, especially in the current context when we want to focus on the quality rather than the quantity of projects.
How should we deal with that fact?
To be honest, it's difficult to change that policy. Local authorities want to maintain their authority to approve FDI projects in their areas, while leaders at a higher level are sometimes generous with local authorities. The result is spreading and ineffective investment.
In order to ensure the country's interest in attracting FDI, we need to carry out certain adjustments. The Ministry of Investment and Planning should have the authority to examine and approve licenses for important projects, such as those on power, transport and manufacturing that are worth $50 million or more. On the other hand, the local people's committees and the management of industrial zones should have the authority to examine and approve licenses for projects that are worth less than $50 million.
There should also be a special mechanism for the big cities of Ha Noi and HCM City.
How do you evaluate Viet Nam's investment environment?
The value of registered FDI projects as of end-July this year is 80 per cent of that in the same period last year. Some people see this figure as a sign that our investment environment is "having a problem." I don't think so.
The fact is that disbursed investment capital by end-July this year increased by two per cent compared with that of the same period last year. It is expected that disbursed investment capital for the whole of this year will increase by five to seven per cent compared with that of last year.
Recently, I worked with Samsung and Intel on major projects in Viet Nam. A CEO from Samsung told me that there are more than 40,000 workers currently working for his company in Viet Nam, and the number of people fired in previous years are too few to mention. Intel, as well, has moved its factories from Costa Rica to Viet Nam, making our country its biggest factory site. We can see that investors have a high regard for Vietnamese workers' skills.
Samsung will also invest in its biggest research center in Ha Noi, which is expected to attract more than 2,000 workers. We should give certain consideration to the shifting of capital from traditional commerce to the high-technology sector.
What can Viet Nam do to take advantage of this change?
First, we need to make the proper adjustments to our policies. We need a new mindset when considering FDI projects. We should choose only projects that are good for the country.
Second, there's an urgent need to change the bureaucracy from the centre to the local level. Each person belonging to that machine must adapt themselves to the changes. We need to change to a for-service administration. — VNS