Following the open-door and red-carpet policies, foreign investors came to Vietnam and significantly contributed to speeding up the economic growth, boosting the competitiveness and improving the quality of goods and products but they also brought in irresolvable problems although Vietnam has seen them.
Foreign-led companies, also known as FDI enterprises, have infused a fresh spirit into domestic production and business activities. The competition of companies has been stepped up, thus supporting the country’s growth in the international economic integration process. A leading Vietnamese economist said the biggest FDI attraction achievements in the past few decades are to accelerate growth, restructure economy, upgrade industrial level and introduce new business methods.
From an overview and long-term angle, if we were wiser, benefits from FDI would be definitely bigger and spill-over effects would be stronger. If we look at FDI from the first-rate targets of improving industrial structure, upgrading human resources, cooperating with domestic enterprises, and helping Vietnamese businesses to effectively participate in the global value chain, it has brought in much. Many FDI enterprises fight against domestic companies to attract better personnel and cause serious environmental pollution.
However, apart from what are called gains for Vietnam, FDI projects have negative impacts. Recently, the electricity complained that massive presence of foreign-invested steel projects was due to cheap electricity. After they sell their products, they return money their homeland. With export-oriented policies, foreign investors in Vietnam export more than 80 % of their products. However, export revenue growth of FDI companies is slower than their import spending speed. According to the General Department of Customs, import expenditure of FDI companies from 2006 to 2009 accounted for about 36 % of the country’s total. In 2009 alone, machinery- equipment and raw materials accounted for about 6 % and 26 % of the country’s total of their kind but export revenues of the two categories account for 15 and 70 %, respectively. Import growth of this economic sector climbed 30 % a year on average.
But, according to Dr Tran Dinh Thien, Director of the Vietnam Economics Institute, half of FDI enterprises operating in Vietnam reported losses. Their losses do not happen in one or two years but in many straight years. This is extremely abnormal. Why a majority of companies cry for loss in an investment heaven? Why don’t foreign investors leave the country as they suffer losses in so many years. Does the existence of this sort of loss make Vietnam an investment heaven for foreign investors? Do they deliberately declare loss to avoid tax payment? And, in fact, foreign investors in Vietnam usually target at domestic consumption first.
In a recent interview with the press, Mr. Donlan, General Manager of Vinacapital, said: Foreign portfolio investment is reviving although investment funds managed by VinaCapital Fund are selling lower than peak in 2008 and their capital mobilisation is still difficult. However, according to Mr Donlam, many investors are waiting for an opportunity to do business in Vietnam. "There will be a strong wave of investment at the end of 2010 or at the start of 2011," Mr Donlam asserted.
Dinh Thanh
Vietnamese
