(VOVworld) The Ministry of Planning and Investment reports that foreign direct investment attraction in Vietnam reached only 37.5 million USD last month due to the global recession. But domestic economists say the figure is not worrisome. The key task is how to use FDI more efficiently under the framework of the national economic development strategy.

Over the past 20 years, FDI has been poured to real estate (Photo: vef.vn)

Last year Vietnam attracted a total of 14.7 billion dollars of Foreign Direct Investment, falling 26% from 2010’s FDI, according to the Foreign Investment Department of the Ministry of Planning and Investment. This resulted from the global economic downturn and more selective investment quality. Professor Nguyen Mai, President of the Association of FDI Enterprises says the recent decline in the volume of FDI projects and capital is not too ominous since only half of the more than 100 billion USD of FDI capital has been disbursed. It could take 5 more years to disburse the rest of the capital even if there are no newly-licensed projects.Professor Mai says 'The newly-registered capital doesn’t mean a thing. We should be more concerned about investment fields, efficiency and the relevance to Vietnam’s priority in high technology, education, health care, and energy-saving and environmentally friendly industries. The Ministry of Planning and Investment is developing a policy which focuses on the effectiveness, quality, and sustainable development'. 

Over the past five years since 2005, Vietnam attracted 155 billion USD of registered FDI but the total disbursement was only 47 billion dollars, about 31%. This indicates persistently poor management and project assessment. Doctor Pham Hung Tien, Deputy Director of the Center for Foreign Direct Investment Research at Hanoi National University, says 'Regarding the master-planning and project licensing process, we can do better work calling for new investment projects, assessing their effectiveness, and post-licensing checking. The disbursement rate in Vietnam is about 30% which is not very worrying. What is important is what areas the money is disbursed in and how it influences Vietnam’s socio-economic development'.

FDI attraction has obviously contributed to tax revenues for the state budget, job generation, and technology transfer, especially in industrial and agriculture sectors. But not all FDI projects live up to expectations. The Central Highlands province of Lam Dong is an example. 68 out of 108 projects in Lam Dong have invested in agriculture, but all of them relied on manual labor. The lack of new technology creates no benefits for farmers. Phan Van Dung, Deputy Director of Lam Dong’s Department of Planning and Investment, says 'We should make sure that besides making a profit, investors help local farmers upgrade their technology and gain useful productivity skills'.

FDI capital disbursement in 2011 reached 11 billion USD (Photo: Vneconomy.vn)

Meanwhile Do Nhat Hoang, Director of the Foreign Investment Department has this to say 'In the future, in its policy on foreign investment, Vietnam should prioritize investment quality, sustainable growth, and the development of green technologies, support industries, and high-tech industries that are globally competitive. We should also increase pre- and post-check inspection activities and create a mechanism to closely review and monitor licensed projects'.  

In 2012, Vietnam targets about 16 billion USD of FDI registered capital, with a focus on project quality and efficiency, and improved state management.

To Tuan