FDI sector makes up VND7.5 of every VND10 earned from exports
VietNamNet Bridge - Dau Anh Tuan from the Vietnam Chamber of Commerce and Industry (VCCI) said that of every 10 dong worth of export turnover, 7.5 dong belong to the foreign direct investment (FDI) sector. The figure was five out of 10 dong some years ago.


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A GSO (General Statistics Office) report showed that in the first seven months of 2017, total export turnover reached $115.2 billion, up by 18.7 percent in comparison with the same period last year. While Vietnamese enterprises exported $32.2 billion worth of products, foreign invested enterprises (FIEs) exported $83 billion.

Citing the figures, economists have expressed deep concern that the Vietnamese economy depends heavily on the FDI sector.

In the first seven months of 2017, total export turnover reached $115.2 billion, up by 18.7 percent in comparison with the same period last year. 

“The contributions by the FDI sector to the national economy are huge. But we need to think about what we will have if FIEs leave,” said Nguyen Thi Tue Anh, deputy head of the Central Institute of Economic Management (CIEM).

FIEs make up a large proportion of Vietnam’s GDP, and productivity in the FDI economic sector is the highest, but Vietnamese have not received benefits from this.

Tuan said while FIEs in Vietnam have been joining global production chains, they haven't helped Vietnamese enterprises to join.

VCCI has learned from annual surveys that FIEs only buy 26.6 percent of input materials from Vietnamese enterprises, while the remaining parts are imported from holding companies.

“The cooperation between FIEs and Vietnamese enterprises is inconsiderable,” Tuan commented.

He believes that there are three reasons behind this. First, the low quality of the labor force. Second, low technology and low capability of absorbing technology. Third, the long distance in geographical position.

Regarding geographical positions, Tuan noted that cooperation between FIEs and Vietnamese enterprises tends to be stronger in areas where they are closer to each other.

Economists have repeatedly spoken about the reliance of the national economy on FDI sector, saying that it makes the GDP growth rate unsustainable. 

“The most important factor that attracts foreign investors is the cheap labor force. The quality of management has never been cited as the attractiveness of Vietnam,” Tuan said.

“But the most important factor will not exist in the future when the pay to workers will increase. Will Vietnam still be an attractive destination point for foreign investors,” he said.

Le Duy Thanh, deputy chair of Vinh Phuc province, said it is necessary to create favorable conditions for Vietnamese enterprises to develop instead of gathering too much attention to attract FDI.

Explaining this, if one foreign investor pays VND1 billion in tax, they can pocket VND4 billion. And so do Vietnamese enterprises. 

However, the difference is that the VND4 billion that Vietnamese enterprises pocket will stay in Vietnam, while the VND4 billion earned by foreign investors will be transferred abroad.


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Kim Chi

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