Experts have urged the government to change viewpoint about FDI attraction

A survey on the sidelines of the APEC Summit in Papua New Guinea in mid-November found that Vietnam tops the list of the destinations for foreign investors in APEC.

The high registered FDI capital of $38 billion in 2017, the highest level since 2009, suggests that FDI will keep flowing into Vietnam.

In addition, the new policies applied by the US are expected to have a bigger impact on China than Vietnam. The tax imposition by the US on hundreds of billion of dollars worth of exports from China has triggered a wave of foreign investors relocating their factories from China to Vietnam.

Nevertheless, the good news has raised worries as well. Experts have repeatedly given warnings about the inflow of outdated technologies to Vietnam which may turn the country into a technology dumping ground.

Just two years ago, an environmental scandal was discovered. The illegal discharge of untreated waste water into the environment by Formosa caused serious consequences. 

After that, activities that caused pollution by Mei Sheng Textiles Vietnam in Ba Ria- Vung Tau province and Lee & Man Paper Plant in Hau Giang province were discovered.

In August 2016, the Ministry of Natural Resources and the Environment (MONRE) gave an official warning that the FDI capital flow tended to head for energy- and natural resources-consuming, labor intensive and environmentally unfriendly fields, such as metallurgy, ship repair, textile & garment, footwear, mining, pulp production, chemicals and farm processing.

The achievement of attracting $150 billion worth of FDI in 2013-2018, which accounted for 45 percent of total FDI capital registered in the last 30 years, could be expensive in other ways. 

Experts have repeatedly urged agencies to change their views about FDI attraction and become more selective in calling for FDI. However, they also emphasized that the quality of the next-generation FDI will depend on Vietnam. 

In 2018, Vietnam’s economy fell by three grades to 77th out of 140 countries in the Global Competitiveness Index. If Vietnam has low competitiveness, it is likely to attract labor intensive and energy-consuming projects rather than hi-tech projects.

Vietnam has been warned that with the regulations on product origin stipulated in FTAs, there will be a wave of foreign investors relocating their dyeing and leather processing workshops from China to Vietnam. This began two years ago when Vietnam was preparing for the TPP.

“Vietnam needs to change the view of foreign investors who invest in Vietnam just because they are attracted by the cheap labor force and low environmental costs,” said Le Dang Doanh, a respected economist. 

RELATED NEWS

The green economy needs the right kind of FDI: gov't

Businesses learn lessons from Formosa scandal