Dr. Phan Huu Thang, former Director of the Foreign Investment Department: Maintain attraction to traditional markets, expand cooperation with potentia

VCN - How will the recent global instability affect the attraction of FDI capital in Vietnam; and what does Vietnam need to do to take advantage and achieve the goal of attracting FDI in the 2021-2025 and 2025-2030 periods in both quality and quantity?
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Dr. Phan Huu Thang, former Director of the Foreign Investment Department: Maintain attraction to traditional markets, expand cooperation with potentia
Dr. Phan Huu Thang

Regarding these issues, Customs News spoke with Dr. Phan Huu Thang, former director of the Foreign Investment Department (Ministry of Planning and Investment).

How have recent global unstable developments such as the Russia – Ukraine conflict, and China's "Zero Covid" campaign had an impact on attracting FDI in Vietnam, sir? Is this an opportunity for Vietnam?

The conflict between Russia and Ukraine is not merely a regional conflict, but represents a serious rift in relations between Russia and the West. It has profound effects on Europe and the whole world, potentially leading to a change in global geopolitics.

Some large countries will take advantage of the instability caused by this conflict to make their own calculations in their favor, and territorial disputes and conflicts between large and small countries continue to escalate. The global economy will be depressed and global FDI inflows will decline accordingly.

The most serious effect of the Russia-Ukraine conflict on the world economy is to make commodity prices soar. According to the International Monetary Fund (IMF), in 2022, inflation is expected to continue to increase by an average of 3.9% in developed economies, and 5.9% in developing and emerging market economies. To control inflation, many countries, especially the US, have implemented a tight monetary policy by raising interest rates. This will lead to reduced investment by corporations, businesses, and reduced consumption globally.

Besides, China's "Zero Covid" campaign has reduced China’s domestic consumption demand and import and export turnover with the rest of the world. Vietnam is also affected to a certain extent; however, the impact of the above factors is only in the short term. FDI enterprises in Vietnam have experienced dealing with them when experiencing the recent Covid-19 pandemic, so their ability to attract FDI in 2022 will not be affected much. Turning threats into opportunities requires Vietnam to quickly identify the "bottlenecks" of the country; continue to think of breakthroughs to keep up with the trend and adapt to global changes.

In your opinion, what should we do to improve FDI in both quality and quantity?

Along with project screening, to achieve the goal of attracting FDI in the 2021-2025 and 2025-2030 periods as set out in Resolution 50-NQ/TW, it is necessary to develop and implement a strategy to attract FDI to guide investment promotion activities of ministries, branches, and localities.

The strategy to attract FDI in the 2021-2030 period needs to clearly identify priority areas to attract advanced technology, new technology, high technology projects, clean technology, and modern management with high added value and spillover effects, connecting global production and supply chains, as well as organically connecting with the domestic economic sector.

Currently, the development level among localities in the country is still different, so it is necessary to attract FDI in a balanced and reasonable manner among regions in accordance with Vietnam’s socio-economic development planning.

Therefore, it is necessary to have a socio-economic development plan from FDI capital.

Accordingly, localities with relatively modern infrastructure and quality human resources should focus on attracting high-tech projects, new technologies, research and development projects, and modern services. Localities with difficult socio-economic conditions continue to attract FDI projects in labor-intensive industries, but must ensure conditions of technology, environment, and energy saving. The list of national projects calling for FDI will clearly identify each type of large-scale project by industry in each specific area. This is both clear and transparent for foreign investors, while avoiding competition to run projects between localities and investors, which worsens and reduces the competitiveness of Vietnam's investment environment.

Regarding partners, it is necessary to attract multinational corporations to locate their headquarters and establish research and development (R&D) centers and innovation centers in Vietnam, encouraging the transfer of technology and management skills to Vietnamese enterprises. Maintain attraction to traditional markets and partners, and expand cooperation with other potential markets and partners such as the UK and India. Determining the right investment partners is especially important because it is related to building a resilient economy, security, social order, and national defense in the long run. It is necessary to have a set of selection criteria in line with the "multi-lateralization and diversification" orientation of investment partners in accordance with the country's socio-economic and geopolitical conditions.

Thank you, sir!

By Xuan Thao / Ha Thanh

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