Vietnam to focus on capable investors in Summit

Speaking to Saigon Investment prior to the Vietnam Business Summit (VBS-2019), Ms Pham Chi Lan, former member of the Prime Minister’s Board of economic researchers, said that Vietnam is under a lot of pressure currently, and VBS-2019 will be a great opportunity to choose good investors and partners for future development projects.

Prime Minister Nguyen Xuan Phuc welcomed business delegations at VBS 2018. Photo: VIET CHUNG
Prime Minister Nguyen Xuan Phuc welcomed business delegations at VBS 2018. Photo: VIET CHUNG

Time to change direction

JOURNALIST: - Some people believe that VBS-2019 will be an opportunity for Vietnam to promote its investment environment, and attract more FDI capital into the country. What is your opinion?

Ms. PHAM CHI LAN: - I think VBS-2019 will be a chance for Vietnamese companies to find business partners and foreign companies to better understand the investment environment in Vietnam. It is now time for Vietnam to choose capable investors with advanced knowledge in science and technology, and FDI companies with strong commitments to transfer the latest technology.

Now, Vietnam has established economic and business ties with more than 200 countries and territories, and is a member of several important trade organizations in the region and around the world. The world is undergoing lots of changes, and it is now an opportunity for Vietnam to re-negotiate economic relations with foreign partners. VBS-2019 is very significant as several Japanese and South Korean companies will participate, which indicates a move towards more investments coming in from these countries as a result of the China-US trade war, and it also shows that they find Vietnam to be an interesting investment environment.

- What do you think about the role of FDIs over the past few years?

- Over the past few years, FDIs have made substantial contributions to Vietnam’s economic development, which has been widely recognized and even Resolution 50 by the Politburo recently admitted to these contributions. Another important part has been the transfer of technology through FDI companies, which has enabled domestic companies to learn from experience in management, science and production organization, and as a result domestic companies have made a lot of progress. It should be stressed that Vietnam really needs foreign investment because even powerhouses like Japan and the USA still highly value FDIs. Vietnam is a developing country and badly needs to enter a new stage of development, a stage that depends heavily on science and technology, to make considerable breakthroughs in productivity. That is why we really have a serious need to attract more FDIs.

But I believe Vietnam is under a lot of pressure from foreign economic groups in general and FDIs in particular. These pressures do not only come due to economic issues, but also are concerned with political and diplomatic matters. However, these are general challenges and an opportunity for Vietnam to “turn around” and change direction by choosing strong economic partners and thereby shaping a positive and advanced economic development.

Three concerns about FDIs

- As mentioned by you, Vietnam is under pressure and must select the right and suitable partners as well as try to attract more FDIs. How do you think Vietnam should make these decisions?

- Resolution 50 by the Politburo pointed out that there have been commitments to transfer technology from FDIs, but there have been no actual transfers of technology in reality. For example, there have been commitments to make some products in the automobile sector in Vietnam, but it has not been carried out. Another problem is environmental concern. Several FDI companies have caused environmental pollution and violated Vietnamese laws. They mainly need cheap labor in Vietnam, and have not done much in providing advanced training to Vietnamese workers. These problems show the weaknesses in the policies for attracting and managing FDIs in Vietnam.

I strongly believe that Vietnam should take into consideration three major issues when trying to attract FDIs.

Firstly, the policies for attracting FDIs should consider the factor of national security and defense. The national security and defense here should be understood in a way that there are restricted geographical locations, and we should be highly alert when selecting foreign investors and should not choose some foreign investors who are likely to cause problems for national security and defense related matters.

It is now time for Vietnam to be more fastidious and choose only those investors who have advanced knowledge and experience in science and technology, and FDI companies that have a strong commitment to bring in and transfer the latest technology.
Secondly, foreign investors must meet the requirements for environmental protection and transfer of technology. This means, Vietnam must be very careful in the selection process and only give chance to those investors who can ensure some transfer of technology, rather than give opportunities to investment projects bringing in old technology that is very likely to cause pollution. Vietnam no longer needs to attract all kinds of FDIs at any cost, even at a very high cost, such as old technology or those that destroy the environment, and seriously affect sustainable development. Now, Vietnam has the right to select investors and should exercise this right. We will only accept investors that are capable of using and bringing in advanced technology and create high value-added products, because Vietnam now wants to apply the 4th generation technology and carry out an advanced industrialization process.

Thirdly, Vietnam needs to filter out investors who are likely to bring about low or unreal values. For example, they stand behind Vietnamese domestic companies and pour in foreign investments and control all the management activities in Vietnam in an effort to enjoy incentives or evade taxes.

- Do you think the China-US trade war is a great opportunity for Vietnam to select capable foreign investors?

- The China-US trade war is to some extent positive for Vietnam, particularly the possible deflection of investments to Vietnam in the near future. However, there are two kinds of such deflected investments. The first kind has been in Vietnam. They are investors from countries like Japan, South Korea, the USA and EU. Now, they are moving from China to Vietnam, of which Samsung is a good example.

The second kind of investment comes directly from China. They also move to Vietnam to “escape” the negative effects of the tariff war and avoid higher taxes, but we should be highly alert to this kind of investment because there are plenty of high risks involved. These high risks not just pertain to environmental pollution or poor standard and old-fashioned technology, but they may also make Vietnam “an unexpected victim” of the China-US trade war, as Vietnam is being considered a place for Chinese companies to evade high taxation from the US by re-routing export products.

- How do you evaluate the Government’s efforts to improve the investment environment in the past few years?

- I think the Government and concerned departments and agencies have made great efforts to improve the investment environment by improving several legal procedures and investment policies. In my opinion, the competent agencies and officials will further improve these policies and laws, especially the Investment Law and the law on Public Private Partnership (PPP) that will create favorable conditions for foreign investors to pour investments into Vietnam.

I believe that equality and fairness are the long-term and sustainable attractions for creating an environment for large investments. This means that we will provide incentives and equal opportunities for investors, regardless of whether they are domestic or foreign companies, as long as they pour investments in important areas of development in Vietnam or in projects that apply advanced and environment-friendly technology.

-Thank you very much.

Translated by Nguyễn Gia

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