Domestic leading firms for export less 'dependent' on FDI

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There have appeared many leading enterprises in the automotive, seafood, textile and garment industries. Photo: N.Thanh

FDI exports account for 73.8% of the country's total turnover

According to statistics of the General Department of Customs, the export turnover of goods of FDI enterprises reached US$ 10.45 billion in the second period of April (from April 16 to 30, 2023), up 9.4% respectively by US$ 898 million compared to the first period of the month.

In the first 4 months of the year, the export turnover of FDI enterprises reached US$ 79.1 billion, down 12.4% (equivalent to US$ 11.19 billion) compared to last year, accounting for 73.8% of the country's total export turnover.

The group of outstanding export products of FDI enterprises, such as phones of all kinds and components, reached US$ 17.17 billion, accounting for 99.4% of the turnover of this group of the country; computers, electronic products and components reached US$ 15.73 billion, accounting for 98.16%; machinery, equipment, tools and spare parts reached US$ 12.22 billion, accounting for 92.54%.

On the other hand, in the second half of April, goods imported by FDI enterprises reached US$ 7.86 billion, down 5% (equivalent to US$ 415 million) compared to the first period of April 2023. As a result, accumulating the end of April, the total import turnover of FDI enterprises reached US$ 64.92 billion, down 18.3% (equivalent to US$ 14.49 billion) compared to the same period last year, accounting for 65.2% of the total import turnover of the country.

Thus, in the first 4 months of the year, the total import-export turnover of FDI enterprises reached US$ 144.02 billion, down 15.1% (equivalent to US$ 25.68 billion) compared to last year.

Returning to the results in 2022, import and export recorded many historical milestones when the total trade turnover exceeded US$ 700 billion for the first time; in addition to the trade surplus of about US$ 10 billion, many industries entered the "billion dollar and tens of billion dollar clubs".

However, according to Dr Nguyen Van Hoi, Director of the Institute for Strategy and Policy Research (Ministry of Industry and Trade), exports achieved impressive numbers but still had potential risks because many export products were from FDI enterprises.

The value-added, or participation in the export supply chain of Vietnam, was relatively low, especially regarding technology. When entering Vietnam, FDI enterprises committed and supported investment activities, but the rate was extremely low. The impact was visible in 2022 and the first 4 months of 2023; the decline of FDI enterprises contributed to reducing the country's exports.

Therefore, the Institute for Industry and Trade Policy Strategy leader said that it was necessary to develop more binding regulations on technology transfer and implementation of commitments. "It's time to look at the actual number of exports and the added value in that export, to focus on high-value Vietnamese products, such as processed industrial products, other commodities that Vietnam has an advantage", said Mr Nguyen Van Hoi.

Building more enterprises playing the leading role

According to Dr Nguyen Van Hoi, Decision No. 165/QD-TTg approving the Project on restructuring Industry and Trade Industry, aiming for the growth rate of the circulation of consumer goods and services at 13-15%/year, this figure had maintained throughout the years. With a market of 100 million people, the rapidly increasing consumer demand was a potential market.

"In terms of mechanism and the enterprise itself, it has a strategy to promote the production and trading of suitable goods for the domestic market. To export stably and sustainably, the domestic market should be considered as the foundation," Mr Hoi assessed and added that in the restructuring process, it was necessary to focus on further developing commercial infrastructure to connect, create a sustainable foundation for development, promoting domestic trade growing rapidly today, and promoting sustainable exports in the coming time.

Mr To Hoai Nam, Standing Vice Chairman and General Secretary of the Vietnam Association of Small and Medium Enterprises said there were many "leading" enterprises, mainly private enterprises, in the automotive, seafood and textile industries… in recent years thanks to the Resolution on private economic development. "I believe that shortly if we can maintain this, there will be more enterprises with a leading role", said Mr Nam.

Agreeing with the above view, the Institute for Strategy and Policy Research of Industry and Trade leader said that the development process must rely on the private economy, self-forming "leading cranes," and relying on FDI was not possible. Therefore, in restructuring the Industry and Trade industry, it was necessary to build domestic private enterprises with grasping science and technology to lead the country.

"My point of view is that it is necessary to build Vietnamese private enterprise to develop firmly and can enter into joint ventures with foreign enterprises. Restructuring state-owned enterprises to bring about equal competition with other enterprises in the coming period", said Mr Nguyen Van Hoi.