Twenty-five years ago Vietnam rolled out the red carpet to foreign investors, offering them a chance to capitalise on the country’s natural resources, incentive policies, and low labour costs.
“We welcomed them because their technologies were more advanced than ours, and one of the purposes of encouraging the first investment waves was to create jobs for local people,” Vinh said in an online weekly Q&A session run by the government’s portal on July 7.
He said the current incentives are much more selective, especially for manufacturing industries such as footwear and garments which import their materials for production and generate low added values.
“We only grant preferences to those industries that create high added values, meaning more employment generation, more diverse products, and the use of more domestic materials.”
Vinh also explained why Vietnam stands behind Thailand and Indonesia in terms of foreign investment attraction, saying its business environment suffers from insufficient infrastructure and cumbersome administrative procedures.
Statistics show Thailand has attracted investment from approximately 7,000 big Japanese businesses. Vietnam has only managed 1,500.
However, Minister Vinh said there is no point in comparing the two figures, because Thailand opened its doors to foreign businesses several years before Vietnam followed suit.
In addition, the advanced Thai support industry is enticing to large numbers of Japanese automobile companies.
“Vietnam emerged as an attractive market around five to seven years ago, licensing impressive numbers of projects. Not all of these projects reached realisation and not all brought fruitful results,” said Vinh.
The Minister confirmed that foreign investment is important to Vietnam’s economy, accounting for one fourth of the country’s total social investment.
There is no doubt that foreign investment contributes to technology advances, management skill improvements, and successful structural economic reforms.
In the first six months of 2013, foreign direct investment (FDI) businesses exported 66 percent of the country’s total and generated 2 million jobs for local people.
Realising this importance, Vinh said Vietnam will continue offering incentives to attract more foreign investment, while striving to address the issues hindering the development of its business investment.