Spillover the technology through FDI: Need efforts from many sides

The contribution of the foreign investment sector in the 30 years of FDI attraction in Vietnam is very clear. However, there is still concern about the gain and loss of this capital flow. Would you like to analyze on this more clearly?

Looking back on 30 years of FDI attraction, in my opinion, the gain is much more, it is inexact to say loss, but that is what we need to continue to improve. Attracting foreign investment helps us to attract the domestic investment source. In particular, in the beginning, the FDI helped Vietnam remove the embargo barrier and gain access to the world. And the most obvious point is that the FDI into Vietnam together with the domestic enterprises helped Vietnam perfect the socialist-oriented market economy.

Before the renovation, Vietnam was a backward agricultural country, but with the policy of opening and renewal, we promulgated a legal framework on the investment, including the Foreign Investment Law, to receive the investors into Vietnam. To date, Vietnam has attracted US$ 334 billion with 26,500 FDI projects, with US$ 184 billion of disbursed capital. And in particular, the foreign investment has helped Vietnam to shift its economic structure from a backward agricultural economy to advanced industrialization, access to high technology, applying advanced and modern management technology… So far, the FDI sector has contributed 58.2% in manufacturing and processing industry and created 50% of the industrial value of the country, at the same time, 3.6 million direct labor and over 5 million indirect jobs were created. The FDI has changed many regions of the country.

However, besides the above gain, I think we need to continue the improvement of FDI attraction, which is the spillover of the FDI sector. Although we accessed high and modern technology, but transfer between the FDI sector with the domestic sector has not reached what was expected. Especially, in the FDI sector, there is still the phenomenon of transfer pricing, tax evasion, backward technology and some enterprises still cause environmental pollution.

Dear Sir, after 30 years of implementing FDI attraction, what could Vietnam learn from the lessons of experience in managing this capital source?

I think the lesson is that we need to attract selective investment, high technology projects, modern technology, with low energy consumption, effective use of natural resources, without environmental pollution. Second, we need to improve the enforcement capacity of the State apparatus, which from the law to the implementation of the policy must come to life in a convenient way for the investors to reach the market, for FDI enterprises to carry out their business activities easily, so they will contribute to the socio-economic development of Vietnam better. Thirdly, foreign capital and technology should be used effectively. Accordingly, it is necessary to have policies to make the foreign investment sector and the domestic investment sector combine together, contributing to the socio-economic development.

The world is entering the era of technology 4.0, Vietnam is also facing the challenge how to attract the top foreign investors in information technology. So, in your opinion, what should Vietnam do to attract the capital flow into this area?

In order to attract the investors in this area, we need to revise the law in order to have regulations for hi-tech sector, industry 4.0, which makes the enterprises compete more.

In addition, we need the policies to support the domestic enterprises enhance. In fact, so far, we also have a number of enterprises such as FPT, Viettel... but the number of these enterprises is not much. These enterprises also reached out to the world proactively and are recognized internationally. And to spread more, we also have the Law on SME Support, start-up programs and many other policies and programs... I hope the start-up program will be more profitable and we will have a strong start-up team to accompany the approach as well as industrial development 4.0.

Dear Sir, one of the limitations in attracting FDI is that the transfer of technology from the FDI enterprises has not been as expected. However, this problem is from the receiving capacity of domestic enterprises. Would you like to give the solution of this problem?

First of all, the technology transfer, we are currently a member of the WTO, in WTO, we have also committed not to require the compulsory technology transfer. Second, our law regulates technology transfer in the spirit of encouragement. In fact, more than 80% of FDI enterprises have 100% foreign invested capital, so it is difficult to transfer internally. Therefore, we need to look at the technology transfer from a broader perspective.

However, at present, the transfer of technology in the indirect form happens quite often, such as through technology learning, ordering of the investors. The Vietnamese enterprises buy the technology, hire specialists to make products and services that meet the standards of foreign enterprises. Based on that, the Vietnamese enterprises have the technology and make products for the foreign investors, and provide for many other markets. In order to have better technology and meet the expectations of domestic enterprises, we need to support the domestic enterprises. Accordingly, in order to have access to the technology of the world, the efforts should be made from three sides: first is the initiative of enterprises, second is the support for policies and resources of the State, and the third is from partnerships. If we do these well, I believe that in the future, Vietnamese enterprises will increase their reach and access world technology.

Looking back over 30 years, in the near future, in your opinion, which inadequacies of the policy should be overcome to attract the FDI more effectively and sustainably?

At present, the Ministry of Planning and Investment has assigned the Foreign Investment Department to revise the Investment Law and the Enterprise Law to submit the Ministry of Planning and Investment and then submit the Government in the coming time. The review is to overcome the overlap between the Investment Law and other laws, remove, amend the regulations, remove unnecessary conditions in market access as well as in the access process of business investment. In fact, many ministries and branches have removed these conditions. In addition, we also need to review and cut out the unnecessary and cumbersome rules and procedures, at the same time, it is necessary to carry out the post – examination instead of pre-examination to help the investors reach the market the quickest.

Thank you, Your Sincerely!