Vietnam warned of increasing dependence on foreign capital
Indexes for 2017 second quarter reflected Vietnam’s increasing dependence on foreign direct investment (FDI), said the Vietnam Institute for Economic and Policy Research (VEPR) in its recent report on the performance of the economy in the quarter.
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VEPR Director Nguyen Duc Thanh said an upward trend in the proportion of export from the FDI sector showed that the country is relying more on foreign capital.
In 2009, FDI shipments accounted for 32.9% of Vietnam’s total exports, going up to 70.2% in 2016 and 72.4% in the first half of 2017.
Despite a decline in the last half of 2016, FDI flow bounced back significantly in the first six months of this year.
Labour force in FDI industrial businesses maintained high growth rate, while the figure for the private sector plunged between January and June this year. This means the domestic economic sector is losing out on the race against its foreign peer.
VEPR also noted the positive recovery of the economy in the second quarter as it grew 6.17%, compared to 5.78% recorded in the same period last year. The growth was said to be driven by sound performance of services and agriculture.
In the first half of 2017, the economic growth hit 5.73%, representing a slight year-on-year increase.
During the period, imports surged. Trade deficit with the Republic of Korea (RoK) stood at US$15.9 billion, surpassing US$14.1 billion recorded with China.
Vietnam bought commodities from the RoK for US$22.5 billion, up 51.2% year on year, while the figures for China were US$27.1 billion and 16.8%.
