Jacques Morisset, the World Bank Chief Economist, spoke at a ceremony on the launching of a report that took stock of Vietnam’s economic development in July.
Vietnam should not think about how many foreign investors it can attract, but raise the question about what FDI has done for Vietnam, he said. The expert stressed that investments need to bring efficiency and contribute to economic development.
In fact, many FIEs cannot find local vendors. He said that Vietnam should train its workforce and upgrade Vietnamese enterprises, not just try to attract more investment.
Trinh said on Dat Viet that the comments by the World Bank expert were not new.
In fact, Vietnamese economists have many times urged government agencies to review the positive and negative effects that FDI brings to Vietnam. They have warned that Vietnam has been relying too much on FDI, while FDI still cannot bring the desired effects though it has been given many preferences.
The only difference between the comment by the World Bank expert and the warning by Vietnamese economists is that the remark this time was made ‘by a creditor’.
According to Trinh, the World Bank expert recommended that Vietnam reconsider its FDI attraction policy. He also mentioned a worrying issue: Vietnam’s high growth rate heavily depends on international business and domestic consumption. Meanwhile, because of Covid-19, both export and domestic consumption has fallen significantly.
The decline can be seen in every aspect of the economy, while potential resources for growth are becoming exhausted.
The Vietnamese economist said that the World Bank expert may help discourage those who try to lure FDI at any cost.
Over tens of years, Vietnam has accepted many low-quality FDI projects, which use low technologies, pollute the environment, and exploit natural resources in Vietnam.
Trinh cited reports released recently as saying that many FIEs exploited the loopholes of the legal framework to carry out transfer pricing, causing losses to the economy.
“We can only collect some money from the taxes they (FIEs) pay. The technology transfer, which Vietnam most expects from FDI, is nearly at zero. Meanwhile, Vietnam has to offer them too many incentives,” he said.
Trinh went on to warn that an unreasonable policy on attracting FDI affects the strength of the internal economic sector.
“The more we rely on FDI, the narrower internal strength will get,” he warned, adding that it is necessary to think carefully about which business fields Vietnam should encourage investments in and how to call for FDI.
Translated by Mai Lan
Local producers must prepare to meet the requirements of foreign direct investment (FDI) companies to participate in the global supply chains, a top official has said.
As many as 12 cities/provinces have not seen new FDI projects this year, reported Saigon Times.