Technology transfer though FDI channel weak

June 26, 2018 - 09:30

Foreign invested enterprises play an important role in attracting and transferring technology, but the efficiency of the transfer work through FDI channels has not met expectations.

A production line for electrical equipment for automobile and motorcycle manufacturers of Furukawa Automotive Parts (Vietnam) Inc. (FAPV) in Tân Thuận Export Processing Zone in HCM City. — VNA/VNS Photo Danh Lam
Viet Nam News

HÀ NỘI — Foreign invested enterprises play an important role in attracting and transferring technology, but the efficiency of the transfer work through FDI channels has not met expectations.

The statement was made by Deputy Minister of Planning and Investment, Nguyễn Thế Phương, at a seminar held yesterday in Hà Nội.

The seminar provided an overview of attracting and transferring technology in foreign invested enterprises and positioning the role of foreign direct investment (FDI) in technology transfer and attraction, recommending solutions to improve the efficiency of technology transfer and attraction through the FDI channel.

“After three decades of implementing policies to attract FDI capital, the foreign invested sector has become a crucial part of the national economy,” Phương said.

In the first six months of 2018, Việt Nam attracted 1,362 new FDI projects, 507 capital adjustment projects and 2,749 projects under the form of capital contribution, with total registered capital of over US$20 billion.

Foreign investment is an important additional source of capital, accounting for about 25 per cent of the country’s total investment capital and contributing about 20 per cent of GDP.

In 2017, the FDI sector contributed nearly $8 billion to the State budget, accounting for 14.4 per cent of total budget revenue.

Currently, 58 per cent of FDI capital is concentrated in the manufacturing and processing industries, generating 50 per cent of industrial production value, contributing to the formation of some key industries such as oil and gas, electronics and telecommunications.

In addition, foreign investment created jobs, enhancing the quality of human resources and changing the structure of labour forces, Phương said.

He added that foreign investment also contributed to help the country and domestic sector improve efficiency in technology transfer, application and innovation, thus enhancing competitiveness.

“However, the deputy minister said that current FDI projects in Việt Nam mainly focus on assembly and processing stages with low localisation rates, therefore the values generated remain low,” he added.

“Furthermore, the FDI sector has not created a close link with local enterprises to join the global value chain together, poorly promoting the development of the support industry in Việt Nam.”

Nguyễn Thị Tuệ Anh, deputy director of the Central Institute for Economic Management (CIEM), said that FDI had a spillover effect on the economy, reflected through the positive impact on the productivity of the domestic sector.

 “However, pervasive influence from FDI businesses’ technology transfer remains weak, as few Vietnamese businesses gain access to their supply chains,” Tuệ Anh said.

She said that it was necessary to create a fair competition environment so that enterprises could compete and cooperate in production.

The government should also promulgate policies that support domestic enterprises to increase capacity and readily link, absorb technology and receive skills transfer, increase management capacity, human resources, as well as the capacity to sign and enforce long-term contracts.

Đỗ Hoài Nam, general director of the Department of Technology Appraisal, Examination and Assessment under the Ministry of Science and Technology, suggested speeding up the transfer of advanced technology from foreign countries to Việt Nam, attaching special importance to the development of advanced technology on a large scale from foreign-invested enterprises to domestic enterprises, speeding up innovative operations of organisations and individuals.

Meanwhile, Nguyễn Hữu Xuyên from the National Institute for Patent and Technology Exploitation, stressed the necessity to soon complete a legal framework to make the National Technology Innovation Fund operate effectively.

The fund must operate as a financial organisation and not hamper businesses’ approach to preferential credit for technology reception, transfer and innovation, he added. — VNS