Considerable concern has been raised of late regarding the quality of foreign direct investment (FDI) projects with several - worth billions of dollars - on the verge of bankruptcy.
A number of local administrations have said they will revoke investment licenses of projects that have been delayed for a long time.
Vietnam's inexperience in assessing project investors and developers is partly responsible for this situation, Nguyen Tran Bat, chairman and general director of the Invest Consult Group, tells Thanh Nien Weekly.
Thanh Nien Weekly: Why are there currently so many problems to do with attracting FDI?
Nguyen Tran Bat: I don't think we should say there are problems in attracting FDI. It is accurate to say there are problems with FDI projects, but not in FDI inflow to Vietnam.
What about the FDI projects that have been delayed or transferred?
In many cases, we were inexperienced. The most important experience from this is the importance of assessing projects' investors and developers. Wrong assessments will cause inordinate belief in investors. We should be very careful when talking about the potential of projects with investments of billions of US dollars.
Was Vietnam too hasty in licensing FDI projects with big investments?
Each project is an opportunity. The welcoming of an opportunity is sometimes too hasty, sometimes too cautious. Thus, there is a combination of sound decision making as well as good fortune involved (in deciding to license a project).
Assessment is a compulsory and continuous process, and should be conducted on a scientific basis. Earlier, when the State Commission on Cooperation and Investment, and then the Ministry of Planning and Investment were in charge of licensing big FDI projects, the assessment was good. But, since we tasked provinces with doing it, this has not been the case, because the localities are inexperienced or do not have the capacity to assess projects accurately
Some localities seem to have adopted a FDI with an any-cost approach. They are being cautioned to be more careful now. How can the assessment process be strengthened?
As I said earlier, tasking local administrations with licensing projects has led to some haste. The government and the Ministry of Planning and Investment should establish centers for project assessment. They should not be built in each province. But, each of the state's regions (three regions: the north, the center, and the south) should have a center. The assessment should also be done at many levels, from assessing partners to assessing technology and socioeconomic impacts. When considering projects with investments of billions of dollars, the assessment of their socioeconomic impacts, as well as their security and national defense implications should be considered.
We have sometimes gained great achievements in attracting investment, but we've not had concrete standards for project assessment, for example the projects' influence on the environment.
Thus, we should review and streamline the process of assessing big projects, and the Ministry of Planning and Investment should establish organizations, and build project assessment capacity.
What are some of the traps, so to speak, in attracting FDI?
There are many traps. When shopping, we may fall into the trap of sellers of counterfeit goods, and the situation of counterfeit technology and finance.
For example, we did not have a long-term vision, so we accepted Vedan (Taiwanese monosodium glutamate maker which in 2008 was found to have been dumping untreated wastewater into the Thi Vai River for 14 years). We accepted it without environmental requirements in the 80s, and now we have to suffer the aftermath. It shows we are not forward-looking in considering macro-issues in development.
We need capital, so we call for foreign investment. The money may either enrich Vietnamese people or dirty them. We should have a purifying mechanism (to ensure the latter does not happen).
Vietnam lured US$9.1 billion in FDI in the first seven months of 2010, equaling 68.2 percent of last year's figure for the same period, according to the Foreign Investment Department under the Ministry of Planning and Investment.
Between 1998 and 2007, the country licensed 9,500 FDI projects with a registered capital of $98 billion, dominated by the industrial and construction sectors with 5,745 projects and a registered capital of $50 billion.