Over the past few years, FDI has helped the country to achieve high GDP growth rate. However, the fact is that large number of FDI projects are completely inefficiently.

FDI must be in line with development plans

In 2008, FDI hit a record high of more than US$64 billion, triple the capital in 2007. Despite a number of difficulties, FDI in 2009 reached nearly US$21.5 billion and it is expected to hit US$22-25 billion in 2010. The flow of FDI into the country still remains high, however, this is not the core issue, the most important issue is how to use this capital more effectively.

Recently, FDI inflows have hit snags since some projects leave a negative impact on socio-economic development as in the case of causing environmental pollution and not a few other projects lead to an imbalance in local economic structures.

An economic analyst Pham Chi Lan says that this is an urgent issue and the country should reconsider projects and stop carrying out ineffective ones which cause a negative impact on the environment or do not generate jobs for Vietnamese people.

There is growing concern about a number of projects designed to build golf courses, steel and cement plants, seaports, airports and industrial zones. The most important thing is how to develop them in harmony with long-term plans for local economic growth. Vietnam needs to come up with specific sanctions to ensure local agencies follow an overall plan and not grant licenses for infeasible projects or those which cause a negative impact on the environment and the socio-economic development.

Professor Phan Huu Thang, director of the Foreign Investment Research Centre, says that Vietnam now has an opportunity to choose suitable projects in line with the general strategy for national industrialisation and modernisation.

Shifting from quantity to quality

In recent times, although levels of FDI capital have dropped this has not greatly affected the economy as the domestic interest rate and investment rate are still quite high. Therefore fluctuations in FDI inflows are not much of anything but the most important thing is to shift from quantity to quality and to choose effective and suitable projects. Accordingly, this year’s guidelines are to continue to attract more investment capital, accelerate the disbursement of committed capital, develop new high-tech projects and produce more competitive products. This is the main target which can be reached in the near future.