Vietnam has taken pride in its ability to attract foreign investment in recent years, but many are now worried that multinational corporations do not play fair when operating in the country.
Several experts and officials with the Ministry of Planning and Investment pointed out at a recent conference in Hanoi that while foreign direct investment plays an important role in the local economy, there are still many problems that need to be fixed.
Nguyen Huy Hoang, an expert with the ministry’s National Center for Socio-economic Information and Forecast (NCIF), told the meeting on Thursday that up to 30 percent of FDI businesses reported losses for two or three consecutive years or even five years straight, attributing them to higher costs, in order to evade taxes.
He said that despite their promises, many companies barely bring in new technologies. The number of businesses violating environmental laws is rising, signaling a trend of developed countries moving polluting industries to developing economies.
With huge capital, multinational companies have monopolized some sectors like carbonated drinks and livestock feeds, which led to market distortions, he said.
Do Nhat Hoang, director of the Foreign Investment Agency, agreed, saying that the transfer of technology in the FDI sector over the past 25 years has not lived up to what Vietnamese policymakers expected.
Up to 82 percent of over 18,000 projects with FDI funding are 100 percent foreign-owned, meaning that there has been almost no transfer of technology to local companies, the official said.
Meanwhile, Vo Tri Thanh, deputy director of the Central Institute for Economic Management, quoted recent surveys as saying that local businesses are “shrinking," as opposed to the expanding FDI businesses.
Still, Hoang of NCIF gave the FDI sector credit for creating major changes in the economy over the past decades.
As of last year, the service sector, with the help of FDI, accounted for 44 percent of the gross domestic product, up 4 percent from 2000. The FDI sector itself contributed 14.3 percent to the state budget, he said.
He also praised FDI businesses for helping diversify Vietnam’s exports, expand its export markets, and create new jobs.
“It can be said that without FDI, Vietnam would not be where it is now,” Hoang, the investment official, said.
Statistics from the Foreign Investment Agency showed that Vietnam attracted over US$1.8 billion of FDI in the first quarter, more than 66.6 percent of which were for 267 new projects.
Vietnam is expected to attract around $18 billion in FDI this year.