VN needs better balance in FDI, domestic sector

At a recent group discussion among National Assembly delegates, Hue said the country's development in 2015 still depended on the FDI sector while domestic businesses still faced many difficulties, particularly businesses operating in the fields of agriculture, services and tourism.

In order to tackle the difference in development of the two sectors, Hue said it was necessary to use FDI, focusing on businesses with a good value chain, good technology and good management.

He noted that attention should be paid to small- and medium-sized FDI businesses to use technology and experiences of other countries. It should be noted that there are not many big corporations that invested billions of dollars in Vietnam, such as the Samsung group, while it was said that this was now the era of small- and medium-sized businesses.

It was also essential to take measures to boost development and improve competitiveness of domestic businesses, he said. There should have had preferential policies and support mechanisms to boost the domestic sector.

The state should quickly build and issue the law on supporting small- and medium-sized businesses as well as provide guidelines to help the business community effectively implement the revised laws on investment and businesses, he said.

Promoting the national start-up spirit and building a national start-up programme was needed, he said. However, it would require speeding up research and innovation and mechanisms to set up the government risk investment fund as well as to attract risk investment funds both inside and outside the country, he said. “I hope there will be a new investment wave in Vietnam,” he said.

Another measure was to boost linkages between FDI and domestic businesses, Hue said. For example, FDI businesses who wanted to get preferential investment policies are required to have policies to connect with domestic businesses such as using domestic businesses as satellites to develop supporting industries.

In the first six months of 2015, FDI reached an export value of US$52.5 billion, a year-on-year increase of 20 per cent, according to the Customs General Department.

Meanwhile, the domestic sector posted an export value of $25.2 billion during the period, a year-on-year decrease of 8.4 per cent.

During the period, the FDI sector gained a trade surplus of $4.4 billion while the domestic sector's trade deficit reached $7.4 billion.

On November 2, the National Assembly discussed Vietnam's implementation of the 2015 socio-economic development programme. 

The economy produced its highest GDP growth in the last five years at 6.5 per cent, inflation maintained under control while production and exports were on the increase and the country's successful integration with the international community continued through numerous free trade agreements, namely the Trans-Pacific Partnership (TPP). However, NA deputies also voiced concerns over limitations and shortcomings of the economy such as low productivity, increased public debt, a trade deficit and numerous challenges faced by Vietnamese agricultural enterprises and Vietnamese farmers to find markets for their products.

In regards to major free trade agreements such as the TPP, deputies recommended the government perform a comprehensive review of the country's trade policies in order to be prepared for both opportunities and challenges they would bring.

Deputy Nguyen Cao Son from northern Hoa Binh Province asked the government to step up on its effort to provide Vietnamese businesses with more information and guidance on the TPP, especially those operating in the agriculture sector.

Son said not only much support was required to modernise the sector, Vietnam must also pay attention to building its own brands to better compete in a global economy.

Deputy Tran Khac Tam from southern Soc Trang Province said free trade agreements such as the TPP would only help Viet Nam if the country was ready to make use of the opportunities.

Tam said many expected Vietnam’s economy to achieve a growth rate of 8 per cent to 9 per cent annually after joining the World Trade Organisation. However, inadequate management capacity from the inside and unforeseeable developments of the global economy has often brought challenges to our door.

Tam advocated for a strict self-discipline by letting go of incompetent public officials and improve trade-related policies and mechanism.