Will Vietnam receive ‘new-generation’ FDI?
VietNamNet Bridge - Vietnamese officials and economists are now discussing what the country needs to do to receive next-generation FDI (foreign direct investment). After 30 years of attracting FDI, the country understands what it has gained and what it should ‘pay’ for capital flow. 


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The new-generation FDI must be associated with high technologies


After years of development, Vietnam is still doing outsourcing for foreign corporations. Economists all say that Vietnam needs to be choosier when receiving FDI projects. The new-generation FDI must be associated with high technologies and high added value for the economy. 

In the new conditions, new FDI modes have been applied, including M&As. According to the chair of the Vietnam Association of Foreign Invested Enterprises (VAFIE), Nguyen Mai, the NEM (new economy model), or cross-border investment without capital contribution, has emerged as a new trend.

In the new period of FDI attraction, escaping the middle-income trap must not be the only goal for Vietnam. It should also try to be confident when joining the global economy and satisfy world standards. EuroCham and the World Bank for many years have said that it has been difficult to find mid-end and high ranking managers, and workers with good knowledge and skills.

Economists all say that Vietnam needs to be choosier when receiving FDI projects. The new-generation FDI must be associated with high technologies and high added value for the economy. 

Another challenge the national economy is facing is the lack of a technology platform.

For example, the campaign launched by steel manufacturers to seek approval from state agencies to allow import of scrap steel and the loss-taking of the Thai Nguyen 2 steel project both show that Vietnam’s metallurgy industry is still at the beginning of the development path.

The country can now make screws for mobile phones, and car parts and components for shipbuilding, but the production capability is still low.

Regarding agriculture, the reliance on seed supply and fertilizer, plus problems in shifting from small- to large-scale production models, show that it has been difficult for Vietnam to catch up with hi-tech production. 

Vietnam only has 10 years to fulfill the plan on industrialization and modernization. But it is not mastering basic technologies. 

Pham Pho, former rector of the Sai Gon Economics & Polytechnic College, said that Vietnam needs to list the priority industries for FDI. This will allow agencies and businesses to prepare the labor force, infrastructure and financing to receive FDI.

Meanwhile, Mai of VAFIE, noting that new investment modes are increasingly popular, stressed that the government needs to amend the legal system to fit the new conditions.

Foreign investors have poured $8.47 billion into Vietnam as of February 20, or 2.5 times higher than the same period of last year.


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Kim Chi

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