 Deputy Prime Minister Vuong Dinh Hue addresses a consultative conference on fine-tuning foreign investment policies in Binh Duong province (Photo: Bidding newspaper) |
FDI accounts for 20% of Vietnam’s GDP and 70% of its annual export revenue, contributing to the recent trade surplus. By the end of last year Vietnam had more than 27,500 valid FDI projects involving 130 countries and territories with a total committed capital of 340 billion USD.
New FDI attraction strategy needed
FDI attraction over the past 3 decades has been fruitful as a result of a steadily improved business environment, greater trade openness, and Vietnam’s geographical advantages. But there’s a growing need for new policies to ensure FDI sustainability and added value. At a consultative conference on fine-tuning foreign investment policies in Binh Duong province on Thursday, Deputy Prime Minister Vuong Dinh Hue said: “The government intends to initiate a project to review 30 years of FDI attraction. Based on the results, we will issue a resolution on directing and fine-tuning mechanisms and policies to make FDI use more effective.”
Vietnam’s current growth model is based on natural resources exploitation, outsourcing, FDI, and exports. This model is challenged by Industry 4.0, in which AI and robots will replace human labor and manufacturing jobs will return to the developed world. Vietnam has sought ways to minimize the adverse impacts of the 4th Industrial Revolution, including redirecting its FDI attraction policies. Prime Minister Nguyen Xuan Phuc told a dialogue for Vietnamese and foreign business people late last year: “Vietnam will continue to reform its mechanisms, policies, and laws in line with a socialist-oriented market economy. We will continue to listen to businesses’ opinions to make our laws and policies more compatible with international practice. International integration should be strengthened. As Vietnam has joined international trade agreements, there is a great potential for domestic and foreign businesses to thrive in Vietnam. I hope that these initial reforms will create a better environment for investors in Vietnam.”
In addition to improving its market economy mechanism, Vietnam is encouraging entrepreneurship, innovation, technological transfer, infrastructure upgrade, and human resource development. The government is finalizing a project on fine-tuning institutions and policies to improve the quality of FDI by 2030.