Vietnamese enterprises yield to FIEs on home field
VietNamNet Bridge - Economists have called for a rewriting of the rules to create a level playing field in which foreign invested enterprises (FIEs) and Vietnamese have equal opportunities.


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Research carried out recently by Bui Trinh from the Vietnam Development Research Institute and Nguyen Ho Phi Ha from the Finance Academy showed that the foreign invested sector had a high surplus. 

FIEs now have the right to use domestic credit sources, which means that their Vietnamese enterprises in the same fields have to share resources that they find difficult to access.

Vietnam once stipulated that foreign investors had to set up joint ventures with Vietnamese enterprises to do business in Vietnam. However, the strict regulation has been loosened.

As a result, a survey released in 2018 showed that 80 percent of FIEs in Vietnam were wholly foreign owned enterprises.

According to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment (MPI), in 2018, Vietnam attracted $35.46 billion worth of FDI (foreign direct investment) and saw disbursement of $19.1 billion, which is hailed as a great achievement. 
 

According to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment (MPI), in 2018, Vietnam attracted $35.46 billion worth of FDI (foreign direct investment) and saw disbursement of $19.1 billion, which is hailed as a great achievement. 

Nhip Cau Dau Tu newspaper quoted Pham Chi Lan, a respected economist, as saying that Vietnam has to ‘refrain itself from meals to treat guests’. This means that Vietnam offers too many investment incentives to foreign investors, while domestic enterprises are put at a disadvantage.

Lan stressed that Vietnamese enterprises encounter difficulties in using local resources, especially in land access.

The other big problem, according to Lan, is that FIEs, no matter if they fulfill their commitments, will still enjoy investment preferences. Vietnam has not placed sanctions on FIEs which cause environmental problems or ignore workers’ benefits, while it still maintains incentives offered to them.

The race to attract FDI by local authorities has led to a third problem - the excess of incentives. FIEs often get more land than needed, with preferential rents and longer time of use.

Many other economists have repeatedly warned of the preferences for FIEs. They said there are ‘two economies existing in one country of Vietnam’, with two preference schemes.

The economists have urged government agencies to change the ‘rules of the games’ and put FIEs on the same equal footing with Vietnamese ones, emphasizing that Vietnam, in order to pursue sustainable development, must rely on Vietnamese enterprises, not foreign strength.

FDI pledged in Vietnam witnessed a significant yearly increase of 52 percent to $1.9 billion in January 2019.


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Mai Lan

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