Vietnam Will not Attract FDI at Any Cost

It is true that Foreign Direct Investment (FDI) has played a crucial role in Vietnam’s economic development and integration into the world. However, FDI also has negative aspects like unexpected risks and adverse impacts on society. Therefore, it is time that Vietnam thought about how it could use investment more effectively instead of just getting foreign direct investment (FDI) at any cost.
The reality of the situation proves that over the years Vietnam has implemented many policies to attract FDI for economic development. However, some FDI projects are completely ineffective and have left negative impacts on the socio -economic development in the future like exploiting natural resources or causing serious environmental pollution which have generated anger from the public.

The recent environmental disaster in Central Vietnam caused by Formosa, a large FDI project in Ha Tinh Province, is an example. The wastewater dumped by the steel plant of Taiwan’s Formosa Plastics Group killed numerous fish and aquatic creatures in four central coastal provinces of Ha Tinh, Quang Binh, Quang Tri and Thua Thien Hue. Tens of thousands of residents are at risk of giving up fishing in the sea and local economic development is seriously damaged. Therefore, the selection and management of FDI projects in Vietnam should be strictly monitored.

Prime Minister Nguyen Xuan Phuc affirms that Vietnam will not ignore the environment issue
for economics, foreign investment and development. Photo: Thong Nhat/VNA

Related to this urgent issue, at a recent regular meeting of the government, Prime Minister Nguyen Xuan Phuc said: “It is the most serious environmental incident Vietnam has faced”.

Besides instructing relevant bodies to quickly and drastically investigate and resolve the aftermath, the Prime Minister emphasised that economic development goes together with environmental protection and the living environment of residents must be protected. It is a policy which needs to be understood thoroughly in the details.

Recently, when working with the Ministry of Planning and Investment, Deputy Prime Minister Vuong Dinh Hue also asked this ministry to strictly control the management of domestic and foreign investment, thereby not attracting FDI projects at any cost and only selecting suitable projects to support the process of economic restructuring. He said that Vietnam should promote FDI projects with high technology, good governance and those that contribute to generating jobs of high income for locals, increase exports and ensure the country’s foreign currency liquidity.

“Vietnam must have steps to attract investment at a higher level to avoid the situation that one country has two economies; FDI enterprises and domestic ones,” said the Deputy Prime Minister.

FDI plays an important role in economic development in Vietnam. 
In the photo: The Nghi Son Refinery – one of many large FDI projects in Vietnam with a total capital of 9.3 billion dollars. Photo: Quang Quyet/VNA

Manufacturing electronic chips at Bluecom Vina Co.,Ltd  (100% capital from RoK) in Hai Phong. Photo: Danh Lam/VNA

With a total capital of more than 5 billion dollars, the Samsung Thai Nguyen Hi-tech Complex provides jobs for over 64,000 employees.
Photo: Hoang Nguyen/VNA 

According to experts, it is necessary to attract investment but it must be in compliance with the law and the country’s social development targets. To ensure the most effective operation of FDI, Vietnam needs to have clear sanctions to force local authorities to comply with the general planning. They should not grant or revoke licenses for projects which are not feasible or cause negative impacts on the environment, society-economy and security-defense.

Associate Prof., Dr. Tran Dinh Thien, Director of the Vietnam Institute of Economics said: “It is past the time that Vietnam is thirsty for investment capital and relies on foreign investment, it should now look for projects of higher quality, better technology and stronger development”. Therefore, Vietnam as an impartial partner has the right to select the most effective and suitable projects, depending on its development orientation, he added.

During the operation process, some FDI enterprises take unfair advantages of loopholes in management to do illegal actions.
The recent environmental disaster in Central Vietnam caused by Formosa, a large FDI project in Ha Tinh Province is an example.
The wastewater dumped by the steel plant killed numerous fish and aquatic creatures in four central coastal provinces.
In the photo: A delegation to supervise the collection and disposal of dead fish in Quang Tri Province. Photo: Tran Tinh/VNA

Taking a specimen to find out the cause of the  mass fish deaths at sea in Quang Tri Province. Photo: Tran Ting/VNA

Formosa Ha Tinh Steel President Chen Yuan-cheng takes responsibility for causing evironmental disaster in  four central provinces. Photo: VNA

Heads of the Hung Nghiep Formosa Ha Tinh Steel Corporation bow their heads in a gesture of apology to
the Vietnamese people and admit responsibility for compensating and repairing the consequences. Photo: VNA

In the first six months of 2016, foreign investors invested in 53 provinces and cities. Haiphong attracted the largest number of FDI with 22 new projects and 17 projects with adjusted capital, increasing the total newly registered and additional capital of 1.742 billion dollars, accounting for 15.4% of the total registered capital. Hanoi ranks second with a total newly registered and additional capital of 1.63 billion dollars, accounting for 14.45%, followed by Binh Duong and Dong Nai with the figures of 1.07 billion dollars and 928.9 million dollars respectively.

(Source: The Ministry of Planning and
Investment’s Foreign Investment Department)