Multibillion-dollar projects exist on paper only
Provincial authorities began running the race to attract foreign direct investment (FDI) in 2005, when decentralization in licensing FDI projects was activated.
More and more huge projects capitalized at $4-5 billion to $10 billion have been registered, for which the provincial authorities have received acclaim.
However, many of the projects have never been implemented.
Provincial authorities are disappointed as the projects have occupied large land areas, thus causing a big waste in the land fund use, spoiled industry development plans and badly affected local socio-economic development.
In a report about the local economic integration capability released by the Ministry of Industry and Trade’s National Committee on International Economic Cooperation, Nguyen Thanh Trung, head of the research team, said provincial authorities have had to make choices between short-term solutions and long-term development plans.
In Vietnam, a term of office lasts four to five years, while officials needs to have a long term vision for 20, 30 or even 50 years when drawing up local economic development plans.
Since leaders of cities and provinces can stay in their offices for four to five years, they need to make the choices that can bring success just within four to five years, or they will be considered ‘incapable’.
As a result, the leaders focus on short-term plans while forgetting about long-term strategies.
Nguyen Mai, chair of the Vietnam Association of Foreign Invested Enterprises (VAFIE), noted that in many cases, projects were registered with capital of billions of dollars, but the disbursed money comes in dribs and drabs, which have no positive influence on the local economies.
“In many localities, provincial authorities just try to attract FDI to achieve a higher GDP,” Mai said, adding that the projects are not the driving force that develops local economies.
The research team pointed out that FDI efficiency is not in the investment capital of these foreign-invested projects, but in the investment quality.
The northern province of Vinh Phuc, for example, has been very successful in attracting FDI.
The largest project in the province has investment capital of $500 million only. However, the local economy has developed well, with FDI projects bringing tens of trillions of dong to the state budget.