(Haiphong.gov.vn) – After more than 30 years of attracting foreign investment, foreign investment capital has now reached nearly 350 billion USD, an average increase of over 20%/year [...]
(Haiphong.gov.vn) – After more than 30 years of attracting foreign investment, foreign investment capital has now reached nearly 350 billion USD, an average increase of over 20%/year over the past 30 years, and is also the highest growth area in the economy. However, the attraction, management and activities of foreign investment still have shortcomings, limitations and new problems, and it is time for us to adjust and review accordingly.
On August 20, 2019, the Politburo issued Resolution No. 50-NQ/TW on orientations to perfect institutions and policies, improve the quality and effectiveness of foreign investment cooperation by 2030. This is a resolution of special importance to the process of innovating the growth model, restructuring the economy and perfecting the socialist-oriented market economy institutions of our country. in the new era.
On the afternoon of September 6, the Government Electronic Information Portal organized a discussion "Improving the quality of FDI capital flows into Vietnam", with the participation of: Deputy Minister of Planning and Investment Vu Dai Thang, Vice Chairman of Hai Phong City People's Committee Nguyen Van Thanh, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc.
Hai Phong, a city with great attraction to foreign investors
At the seminar, Vice Chairman of Hai Phong City People's Committee Nguyen Van Thanh emphasized the role of FDI capital in more than 30 years of implementing policies to attract foreign investment, as an important factor in promoting socio-economic development of the country in general and of Hai Phong in particular.
Regarding the contribution of FDI in recent times to Hai Phong, Vice Chairman Nguyen Van Thanh said that FDI has made a large contribution to total domestic investment capital, creating jobs for 30-35% of job positions; Contribution to the local budget reaches 17-20%. In particular, in the process of attracting FDI investment, there is also a part of FDI enterprises that also focus on investing in human resource training by, in addition to attracting investment in quality human resources, proactively providing on-site training or sending them abroad for training. There are also a number of businesses that have trained Vietnamese workers to some management positions in factories.
However, according to the Vice President, the issue of technology transfer and management level transfer, and especially production links, is still limited. Especially while we are expecting the localization rate in Vietnam to increase, over the past 30 years this rate has not reached the desired level. The Vice Chairman assessed that Resolution 50 paid special attention and rectified this content and oriented to attract a new wave of FDI.
Regarding the issue of virtual capital of FDI enterprises, Vice Chairman Nguyen Van Thanh said that in Hai Phong, the issue of virtual capital is controllable. Currently, Hai Phong, by the end of August 2019, had 673 projects with a total investment capital of 17.52 billion USD with many large corporations in the world investing in such as LG and Brigestone. LG's total capital invested in Hai Phong is over 5.5 billion USD, bringing high-tech investment flows, and this is what Hai Phong is aiming for, moving from quantity to quality. Implementing Resolution 45 of the Politburo on building and developing Hai Phong until 2030, with a vision to 2045, the city will be a green, civilized, modern port city with developed industry. Hai Phong has also proactively built a list of zone projectsEncouraging investment and a list of projects that do not encourage investment, clearly indicating "prohibited areas" for investment if they affect the environment and investment quality. To avoid investors with virtual capital, the city assigned some sectors of the city to appraise and learn about the business in advance. At the same time, city leaders also directly went to the scene to check whether the capital flow was actually brought into the market or not.
Hai Phong has trade relations with 130 countries and territories, foreign investors investing in Hai Phong alone have reached 38 countries and territories with more than 17 billion USD. That is the result of the Central investment and the city's efforts in building industrial cluster infrastructure, especially the city's geopolitics and geoeconomics, which have brought attraction to investors - the Vice Chairman affirmed.
Deputy Minister of Planning and Investment Vu Dai Thang assessed that Hai Phong's development of criteria and standards for selecting projects is completely appropriate, and affirmed that Hai Phong is in a very favorable position to be able to choose investors.
Regarding the issue of preferential policies for foreign investors, according to Vice President Nguyen Van Thanh, at the present time this is no longer too important because Vietnam is participating in multilateral and bilateral trade agreements, Vietnam's advantages are very great. With a specific geographical location, such as Hai Phong, which has a favorable geographical location, businesses want to invest, and preferential policies are only part of what motivates them. From there, it is necessary to review the setting of preferential policies, because there needs to be fairness among economic sectors. Enterprise law needs to be amended to promote domestic enterprises to develop. “It is necessary to synchronously change the perception of domestic business administrators and harmonize policiesWe only provide incentives for foreign direct investment and domestic investment, so there can be an expectation that domestic businesses will grow before the flow of foreign direct investment into Vietnam" - Vice Chairman of the City People's Committee Nguyen Van Thanh commented at the discussion.
According to the Vice President, attracting FDI needs to be based on socio-economic development planning. In 2018, the Prime Minister issued Decision 821 approving adjustments to the city's socio-economic planning. From there, the city will focus on doing good planning in industrial parks, economic zones, and industrial clusters; delineate the investment field of each industrial park to create opportunities for investors in the same industry group to enter the industrial park, manage the environment and security well, thereby creating a common ground so that in an industrial park, investors have the opportunity to reduce transportation costs, connect with businesses in the same industry, and create a favorable environment in production and business.
The guests at the Program strongly agreed with the Vice Chairman of Hai Phong City People's Committee with the view that, from a local perspective, in addition to institutional reform from the Central Government, there are also a number of issues affecting FDI attraction, which are the assessment of important indicators such as the PCI competitiveness index, administrative reform, including the responsibility of each civil servant in the state management sector to be conscientious and responsible to the public. Government orientation and local plans to attract investment. "So that when foreign investors arrive, they feel close to home, and are ready to decide to invest" - Vice Chairman of Hai Phong City People's Committee stated.
The special importance of Resolution 50 for the process of innovating the growth model and restructuring the economy
At the seminar, Deputy Minister of Planning and Investment Vu Dai Thang said that in the process of summarizing 30 years of implementing policies to attract foreign investment, the Ministry of Planning and Investment went on a field trip to Hai Phong. Hai Phong is where many pilot policies are implemented in implementing foreign investment activities, new management models, large industrial parks such as Nomura, Dinh Vu - Cat Hai Economic Zone, and many large value chains established in Hai Phong city. The Deputy Minister said he had gained a lot from the field trips to Hai Phong, and from there, there was a summary and report to the competent authorities for synthesis in Resolution 50. "It can be affirmed that in Resolution 50 there is a "shadow"a lot of Hai Phong city" - Deputy Minister assessed.
At the seminar, Deputy Minister of Planning and Investment Vu Dai Thang stated that, right from the first days of opening up, the Party and State have had policies to take advantage of the potential advantages of foreign investors in investment capital, technology, markets... The Party's policies have been concretized by 4 Foreign Investment Codes: Foreign Investment Law 1987, Foreign Investment Law 1987. 1996, General Investment Law 2005, General Investment Law 2014. Through these 4 investment laws, a very important legal basis has been created for attracting and using foreign investment. Foreign investment capital has become an important source of capital to support socio-economic development. As an important source of capitalConcentrating on the country's total social investment capital, foreign investment contributes to increasing productivity and increasing the value of our country's labor.
The Deputy Minister also pointed out that, besides the positive aspects, there are certain limitations. In particular, up to now, after 30 years of attracting foreign investment, our country's position and strength have also changed. We have more opportunities to choose from and the time has come for us to prioritize choosing businesses and projects that are suitable for our level of development in terms of science and technology. We do not invite projects that bring environmental and social risks. Therefore, Resolution 50 of the Politburo has provided orientations and policies to attract foreign investment in the coming period to maximize the effectiveness of this important capital source, while at the same time limiting possible risks.bring. In particular, the Resolution used the word "cooperation" rather than "attraction" or "use", demonstrating our equality and initiative when working with foreign partners, and further promoting the responsibility of foreign investors when they do business in Vietnam.
The highlights in the Resolution show that we invite foreign investors that meet high standards of technology and labor, eliminating hidden investors, avoiding taxes and transfer pricing. Expressing his opinion on this issue, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc assessed that from now on it will be a new period, with this policy we can open a new wave of investment, a new generation of FDI into Vietnam.
According to VCCI Chairman, in recent times, the effectiveness of FDI capital has not been commensurate with the amount of investment capital. We still rely on the spread of technology and links with domestic businesses but have not done much. To a certain extent, if FDI investment does not have a choice, it will not only not be able to connect with the domestic small and medium enterprise sector, but will also have the phenomenon of "crowding out" this sector. According to statistics, only 14% of domestic businesses said they have exchange and trading relationships with FDI enterprises. There is an opinion that FDI exists like an "oasis" in the Vietnamese economy, and if it cannot connect with domestic businesses, FDI cannot "take root" deeply into the economy.Vietnam's economy, and thus, the fragility of foreign investment capital is very large, because if there are fluctuations or changes, they will move to another country. Therefore, the requirements for sustainable development are not met.
In addition, in some aspects, Mr. Loc assessed that FDI brings little added value to the Vietnamese economy, is not connected, and has the phenomenon of transfer pricing and trade fraud. Therefore, VCCI highly welcomes Resolution 50 of the Politburo on institutional orientation for the legal system, so that we can direct a new wave of investment in Vietnam. Currently, Vietnam is in the process of moving towards a quality economy with higher growth. And this Resolution follows that reality, to improve the quality of the economy.
Create opportunities to connect FDI enterprises with domestic enterprises
Regarding the issue of connection between FDI enterprises and domestic enterprises, Deputy Minister of Planning and Investment Vu Dai Thang said that we need to promote domestic manufacturing industry. In Resolution 50, ensuring interconnection between foreign investment and the domestic market is a mandatory requirement. The Politburo has pointed out very clear directions, in addition to encouraging foreign businesses to buy goods from domestic businesses, it also pointed out measures to support domestic businesses to participate in the value chain of foreign investors.
According to Deputy Minister of Planning and Investment Vu Dai Thang, it is not accurate to say that Resolution 50 imposes constraints on foreign investors, but here Resolution 50 only repositions foreign investment as a component of our economy, it is equal to all other economic components, and must comply with the provisions of Vietnamese law.
According to VCCI Chairman, it is necessary to upgrade and improve the quality of Vietnamese enterprises in terms of management and technology levels. Thereby creating opportunities for connection between FDI enterprises and domestic enterprises. At the same time, it helps domestic businesses catch up with foreign businesses in technology and management issues.
It is also necessary to recalculate the criteria for incentives for foreign investors, investors must bring in real efficiency, have added value, incentives based on efficiency, not incentives right when investing.
At the seminar, delegates also discussed issues: foreign investment and national defense and security, solutions to connect FDI enterprises and domestic enterprises, reasonable allocation of foreign investment among localities...
At the end of the discussion, the Deputy Minister of Planning and Investment affirmed that we are making efforts to change the business environment, and Resolution 50 called "improving institutions and policies" will be an important push for us to perfect the business environment and institutions, ensuring a more free business environment for not only foreign investors but also domestic investors, contributing to affirming Vietnam's business investment environment ranking in ASEAN. The contents of Resolution 50 have been integrated into related draft laws to be submitted to the National Assembly Standing Committee for consideration in the near future, such as the revised Investment Law, revised Enterprise Law, PPP Investment Cooperation Law, Securities Law...
Through more than 1 hour of frank discussion by the guests, it was shown that our country is ready to receive truly quality foreign capital flows, consistent with current deep economic integration. The story is still long and has many concerns, but it will be an opportunity for those who know how to grasp it and put the country's prosperity first.
Minh Hang summary
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