A highly skilled workforce is needed to attract FDI into value-added industries

According to Deputy Minister of Planning and Investment Nguyen The Phuong, FDI firms play an important role in attracting and transferring technology, but the efficiency of the transfer work through FDI channels has not met expectations.

Despite being attractive to foreign investors, Vietnam has lagged behind other countries in the region in terms of foreign investors’ technology transfer to domestic firms. Specifically, Vietnam’s ranking in this field is the 103rd place, far behind that of Malaysia (13th), Thailand (36th), Indonesia (39th) and Cambodia (44th).

Tran Van Tung, deputy minister of Science and Technology, said that the transferred technologies in FDI projects in Vietnam are currently at the average level of the region.

Technology transfer through FDI projects in Vietnam mainly involves the import of technologies with machinery and equipments, but lack of transfer of soft technology as well as intellectual property, Tung said.

In addition, research and development (R&D) costs of FDI firms are still very limited, estimating at less than 0.1 percent of their revenue, Tung said, adding that major high-tech countries are absent from the list of Vietnam’s top 10 investors, which is a shortcoming in the country’s policy of FDI attraction in the past three decades.

According to Tung, the biggest cause hindered Vietnam to get the foreign technology transfer is that local firms do not have skilled professionals to take over and master the technologies.

Sharing the same view, Nihad Ahmed, senior economist at global provider of economic analysis and forecasts Focus Economics, said that one of Vietnam’s weaknesses is the lack of skilled workers, emphasizing that Vietnam is far behind China, Singapore, Malaysia and Thailand in this field while developing a highly skilled workforce is critical to attracting FDI into value-added industries.

Head of the Delegation of the European Union to Vietnam Bruno Angelet also said that a human resource with high technical expertise is the important factor that European investors require.

Besides bringing in opportunities of jobs with high income and international standard working environment, a skilled workforce will help Vietnam learn governance skills and get technology transfer, Angelet said, adding however, this is a challenge for Vietnam’s education system in meeting the demand for human resources.

Comprehensive policies needed

In order to meet the requirements of the fourth industrial revolution, Deputy Minister Tung said that it is necessary to have suitable policies to enhance the training of skilled human resources to meet the requirements.

Marko Walde, chief representative of the Delegation of German Industry and Commerce in Vietnam, suggested that Vietnam needs a vocational training system geared towards the practical needs of firms.

Besides, Le Duy Thanh, Deputy Chairman of the Vinh Phuc Province People’s Committee, said apart from domestic firms’ initiatives in developing the high quality human resource, the state also needs policies to promote the foreign technology transfer to domestic firms.

Domestic firms should take the initiative in training quality human resources and adopt policies to attract former workers of FDI enterprises with an approach to foreign technology, Thanh suggested.

At the same time, the relevant state authority should issue policies to encourage and force foreign investors to transfer technology to domestic firms when investing in Vietnam, Thanh said. He suggested, for example, FDI enterprises in Vietnam can be required to reach a local content of at least 60 percent, encouraging them to work closely with domestic firms to abide by the regulation and thereby promote technology transfer.