VietNamNet Bridge – Local authorities have been hurriedly preparing for the race to attract foreign direct investment (FDI). Meanwhile, Vietnam, at the national level, still has not got ready for the competition with other regional countries.

Local authorities fight each other to scramble for foreign investors

Japan, which remains the biggest foreign investor in Vietnam, has poured billions of dollars into Myanmar, the country which now catches the attention from the rest of the world, according to Reuters.

Vietnam believes it is now an attractive destination point for Japanese investors. However, in fact, Toyota, Mitsubishi and many other big Japanese groups have announced their plans to expand their production bases in Thailand, or Malaysia, while their factories in Vietnam remain unchanged.

Another example has also been cited to compare the competitiveness of Vietnam and other regional countries. Japan has more than 7,000 businesses in Thailand, much higher than 1,500 businesses in Vietnam.

Edmund Maleski, an expert about Vietnam, has noted that investors now drive their attention to Myanmar, Cambodia, Laos and other Asian countries. This is really a big challenge for Vietnam, especially when Vietnam’s macroeconomic conditions have been unstable over the last few years, which has badly affected the business environment.

Chair of AmCham--Christopher Twomey, also said Vietnam has been facing some challenges in stabilizing macro economy over the last few years. He said at the dialogue with the government in early December 2012 that foreign investors call on the government to take necessary actions to create a more attractive business environment.

Of course Vietnam, the economy which has obtained high growth rates over the last many years thanks to the investment growth, has to make every effort to improve the investment environment.

Statistics showed that Vietnam’s export growth in 2012 mostly came from the foreign invested enterprises. The total export revenue in 2012 increased by $17.7 billion, of which $16 billion came from the economic sector, accounting for 90 percent of the total FDI, according to the Ministry of Planning and Investment.

The big achievements of the economic sector has attracted the special attention of the Governor of the State Bank--Nguyen Van Binh, one of the government members in charge of stabilizing the macro economy.

Binh said at a meeting with reporters recently that he learned much about Japan, South Korea and China. Both Japan and South Korea were severely damaged after the World War 2 and the civil war, while China also had met big difficulties until its opening to the world.

“Vietnam’s neighboring countries have been developing very well, not because f their inner strength or accumulative resources. The key was that they successfully attracted foreign direct investment,” Binh said.

He has attributed the macroeconomic instability over the last few years to the necessity of issuing money to satisfy the development.

“It’s necessary for Vietnam to attract FDI into the production and business, high technologies, the fields that Vietnam still cannot work well,” Binh said.

“It’s necessary to create a new tendency, set up a new legal framework so as to encourage foreign investment to Vietnam. If we can do this well, we can still obtain high growth while we don’t have to issue more money,” he added.

According to Prof Nguyen Mai, a well-known FDI expert, Vietnam needs to see the FDI disbursement increasing from 10 billion dollars a year now to 13-14 billion by 2014-2015 and 21-22 billion dollars by 2019-2020.

TBKTSG