Exports dependence on FDI sector concerns experts

Vietnam has enjoyed high export growth but experts are concerned that the main contributor is foreign direct investment (FDI).

Exports dependence on FDI sector concerns experts
The local export turnover is estimated at $77.34 billion, an increase of 22 per cent. — VNA/VNS File photo

In the first quarter of the year, the country saw an estimated import and export value of US$152.65 billion, up 24.1 per cent over the same period last year. Of which, export turnover was estimated at $77.34 billion, an increase of 22 per cent from Q1 of 2020.

Of the total export turnover, the domestic sector only contributed $18.3 billion, an increase of 4.9 per cent and accounting for 23.7 per cent, while the rest was from the FDI sector with $59.04 billion, up 28.5 per cent and accounting for 76.3 per cent.

Deputy Minister of Planning and Investment (MPI) Tran Quoc Phuong told local media: “The export share of the FDI sector is growing, reaching more than 76.3 per cent, while in the past, it was just between 60 and 70 per cent.”

"This shows that Vietnam's export growth is increasingly dependent on FDI and this is noteworthy,” he said, adding that in recent years, the proportion of FDI contribution in total export turnover has been increasing.

According to the ministry, in 2020 the FDI sector contributed $202.89 billion of the total export turnover of the country, accounting for 71.7 per cent.

Local statistics show that for key export products, the FDI sector is dominant. For example, in mobile phones and spare parts, the FDI sector accounts for 99.1 per cent of exports, while in electronic products, computers and components, it accounts for 98 per cent and 93.1 per cent, respectively.

While in footwear and textiles, the majority of exports also belong to FDI with 81.9 per cent and 62.5 per cent, respectively.

In the export surplus of more than $2 billion of the first quarter, the bigger contributor was from FDI enterprises. In the first quarter, FDI firms, including crude oil, saw a trade surplus of $8.78 billion.

The heavy dependence on FDI has been discussed for a long time, but with the export portion of more than 76 per cent, it was a bigger concern, said experts.

 

Vu Thanh Tu Anh, from Fulbright University Vietnam, said: “The growing dependence of the economy on the FDI sector is very difficult to accept. If Vietnam wants to create internal resources, we cannot depend on FDI as at present."

According to the 2020 Enterprise White Book, by the end of 2019, Vietnam had 758,610 operating enterprises, of which 16,878 were FDI enterprises. Despite accounting for a much smaller group, they have a huge contribution to the country's export turnover.

To deal with the issue, economists have said the country must build an autonomous economy on the basis of mastering technology and integrating and diversifying markets.

Minister of Planning and Investment Nguyen Chi Dung previously said: “Vietnam must form a new national production capacity, have autonomy, participate effectively, improve its position in the global value chain and be effectively resilient to major and unusual external impacts."

The minister called for better connections between the FDI and the domestic sectors, suggesting a programme to encourage experts and managers who are working in foreign businesses to establish Vietnamese enterprises.

He told local media: “These are people who have the knowledge, know the technology, the production process, the operating process and the business administration, have relationships and experience so when separating to establish a business, those enterprises will see the fastest success.”

Other experts agreed that attracting talents from FDI to local enterprises was a way for Vietnamese enterprises to gradually grow and become partners with FDI enterprises and join their global value chains and more contribute to Vietnam's export growth, avoiding being too heavily dependent on foreign investment as at present.  

VNS

Vietnam to attract more foreign investment in high-tech industry

Vietnam to attract more foreign investment in high-tech industry

Vietnam will lure more foreign investment in the high-tech industry by offering more incentives and amending requirements for high-tech businesses.

Key export sectors the target of M&As by foreign investors

Key export sectors the target of M&As by foreign investors

Several of Vietnam’s key export sectors have become magnets for merger and acquisition (M&As) activities, posing a risk of leading enterprises in those sectors being purchased by foreign investors.

 
 

Other News

.
Vietnam needs improved marketing strategy
Vietnam needs improved marketing strategy
BUSINESSicon  07/05/2021 

The global outbreak of the Covid-19 pandemic has made the world realize the limitations in the current supply chain, which shows an over reliance on just one link, which is a plausible reason for the collapse of the system. 

Balancing act required for open wood industry
Balancing act required for open wood industry
BUSINESSicon  07/05/2021 

Foreign-invested wood and timber enterprises are contributing a significant chunk to the nation’s export turnover. 

Tax policies for property sector must be carefully studied: finance ministry
Tax policies for property sector must be carefully studied: finance ministry
BUSINESSicon  06/05/2021 

Tax policies for the real estate sector must be carefully studied and introduced at the appropriate time to ensure feasibility and limit speculation, according to the Ministry of Finance.

Enterprises bump up prices on rising raw material costs
Enterprises bump up prices on rising raw material costs
BUSINESSicon  07/05/2021 

With raw materials prices rising, enterprises are hiking prices to protect their profit margins.

Confidence in Vietnam’s business environment continues to rebound
Confidence in Vietnam’s business environment continues to rebound
BUSINESSicon  07/05/2021 

European business leaders began the year positive and optimistic about Vietnam’s trade and investment environment, according to new data from the European Chamber of Commerce in Vietnam (EuroCham).

Businesses stuck amid ministries’ disagreement about tax refunds
Businesses stuck amid ministries’ disagreement about tax refunds
FEATUREicon  07/05/2021 

A number of wind power projects are facing difficulties as taxation agencies have stopped VAT refunds.

Pandemic fluctuations persist in Vietnamese labour market
Pandemic fluctuations persist in Vietnamese labour market
BUSINESSicon  07/05/2021 

The General Statistics Office's report on Vietnam's employment situation over Q1 of 2021 has uncovered the breadth and depth of the pandemic’s effects, despite the impressive work carried out to keep the coronavirus away from its people.

PAN Group entrusted with protection of ST24 and ST25 rice trademarks in int'l markets
PAN Group entrusted with protection of ST24 and ST25 rice trademarks in int'l markets
BUSINESSicon  06/05/2021 

The PAN Group has been authorised to register ownership rights for the ST24 and ST25 rice varieties in foreign markets and protect related trademarks.

Trademark trickery blurs rice status
Trademark trickery blurs rice status
BUSINESSicon  06/05/2021 

Unlike regional competition, Vietnamese branding approaches of well-established rice varieties could still see some improvements because of existing ambiguities in the product development strategies of the responsible government agencies.

Tech-led foundation crucial in e-commerce
Tech-led foundation crucial in e-commerce
BUSINESSicon  06/05/2021 

Vietnam’s e-commerce development is a bright spot for Industry 4.0 with a high growth rate of 20-30 per cent.

Business health to come first in future wage date changes
Business health to come first in future wage date changes
BUSINESSicon  06/05/2021 

In addition to recommending against an increase in wages this year, many experts and businesses have also opposed proposals to change the timing of regional minimum wage changes from January 1 to July 

GDVC licenses Hateco Group’s customs clearance site for post and courier items
GDVC licenses Hateco Group’s customs clearance site for post and courier items
BUSINESSicon  06/05/2021 

The General Department of Vietnam Customs has issued Decision No.1189/QD-TCHQ to grant an operational license for the customs clearance site for post and courier items of Hateco Group. The site is located in Long Bien Inland Clearance Depot in Hanoi.

Value sharing and opportunities for Vietnamese suppliers in global value chain
Value sharing and opportunities for Vietnamese suppliers in global value chain
BUSINESSicon  06/05/2021 

Multinationals corporations and foreign-invested enterprises increasingly focus on sustainability in their cooperation with local suppliers, 

BOT investors face debt, heavy losses for massive loans
BOT investors face debt, heavy losses for massive loans
BUSINESSicon  06/05/2021 

Build-operate-transfer (BOT) investors are falling into a debt trap and incurring heavy losses due to a decline in the toll fee collection, 

Natural island estate attracts foreign investors
Natural island estate attracts foreign investors
BUSINESSicon  05/05/2021 

Not only attracting domestic customers, residential areas on natural islands also attract overseas Vietnamese and foreign investors thanks to convenient, classy and private ecological living spaces.

Selling cars and smartphones, Vietnam’s No. 1 billionaire earns huge profits
Selling cars and smartphones, Vietnam’s No. 1 billionaire earns huge profits
BUSINESSicon  07/05/2021 

The first quarter profit of Vingroup, owned by Vietnam’s richest man Pham Nhat Vuong, increased five times over the same period last year thanks to three major real estate projects and high growth in sales of VinFast cars and smartphones.

More local banks have young leaders
More local banks have young leaders
BUSINESSicon  06/05/2021 

Ms. Tran Thi Thu Hang, CEO of Sunshine Group, has become the youngest leader in Vietnam’s banking industry after being appointed chairwoman of KienLongBank.

VIETNAM BUSINESS NEWS MAY 6
VIETNAM BUSINESS NEWS MAY 6
BUSINESSicon  06/05/2021 

Vietnam’s production rises at fastest pace since Nov 2018

Samsung Vietnam wants to buy renewable energy directly from producers
Samsung Vietnam wants to buy renewable energy directly from producers
BUSINESSicon  05/05/2021 

Samsung Vietnam has asked the government for a renewable energy pilot project that will enable the company to buy electricity directly from producers, instead of through the monopoly distributor Vietnam Electricity.

UCC coffee quality contest aims at supporting VN coffee production and farmers
UCC coffee quality contest aims at supporting VN coffee production and farmers
BUSINESSicon  06/05/2021 

Through the annual UCC Coffee Quality Contest, UCC Group has been contributing to promoting and improving the quality of Vietnamese coffee, towards the goal of sustainable development.

 
 
 
Leave your comment on an article

OR QUICK LOGIN