Dr. Phuong Ngoc Thach, Chair of the HCM City Economics and Management Science Association, affirmed that in many cases, the problem does not lie in the Vietnam’s investment environment.
“Local authorities always try to attract as many FDI projects as possible to their localities, believing that money would help develop the local economies,” he explained.
“However, it is not easy to mobilize foreign investors’ money,” he commented. “A lot of investors come to Vietnam empty handed. They do not bring money, but come to Vietnam to look for money.”
Thach noted that in some cases, foreign investors wanted to invest in Vietnam with good will, but they later had to give up registered projects because of some reasons. However, this is not the common reason behind the majority of pending projects.
Despite the financial incapability, foreign investors still can register investment projects in Vietnam because local authorities, which lust for FDI projects, loosened their management.
“Foreign investors seem to understand Vietnam’s culture, laws and Vietnamese managers’ feelings. Larger investment projects clearly can catch higher attention from local authorities,” he said.
However, in many cases, multibillion dollar projects remain on paper. Investors registered investment projects but do not intend to develop the projects. Tens of hectares of land allocated to investors have been left idle or turned into places for locals to graze oxen.
Phan Huu Thang, a renowned expert on FDI, commented that while local people have to leave their homes to make room for projects’ sites, the land cannot be used in an effective way.
He emphasized that this is a big waste of resources, because land cannot be exploited effectively. Foreign investors occupy land but leave land unused, while farmers have no land for cultivation, while other investors have no opportunities to use the land.
While other regional countries such as China, Singapore and Malaysia have been succeeding with their policies on attracting FDI, Vietnam has met with problems on this issue.
Thach noted Vietnam needs to face facts that it has failed to implement many targets when attracting FDI. The supporting industries development is a typical example. Vietnam expects technology transfer from foreign investors to develop its supporting industries. However, the goal has not been reached.
Meanwhile, Vietnam has to face problems caused by the FDI sector, including transfer pricing and tax evasion. Some experts said that Vietnam has to sacrifice many things for FDI.
(Source: Dat Viet)