Vietnamese lawmakers warn against undue dependence on overseas investors

Delegates of the legislative National Assembly (NA) have waken up to the danger of being addicted to foreign investment and resultant loss of self-reliance.

According to international norms, FDI should account for only 5 percent of gross capital formation, but in Vietnam, it now makes up 25 percent, which may pose risks to the economy.

Economic development cannot rely on foreign firms, only local ones, they said at an ongoing session of the NA. Foreign investors could leave Vietnam for other markets when the country no longer has a competitive advantage.

“The country’s economy now depends so heavily on foreign companies, so what will happen if one day they leave us?” legislator Truong Trong Nghia said. 

He added that Vietnam offers many land and tax incentives to attract foreign direct investment (FDI), but the sector’s contribution to the economy is still limited.

Foreign sector now accounts for more than 70 percent of total export revenue, but its contribution to the state coffers is only around 15 percent.

He suggested that it is now time to review existing policies, slash overly generous incentives for foreign investors.

Lawmaker Hoang Quang Ham shared Nghia’s points.

Ham said foreign investors have done very little technology transfer to benefit Vietnam. "Technology transfer between foreign investors and local firms have not met our expectation."

NA delegates said Vietnam should carefully select FDI projects to ensure they benefit the country. Legislator Tran Hoang Ngan said: "The government should establish strict criteria to attract FDI, with a focus on environment protection, and choose foreign investors that do not have bad reputation."

Vietnam attracted $8.06 billion of FDI in the first four months of this year, down 23.9 percent against the same period of 2017.

The country’s FDI reached an estimated $17 billion last year, the highest annual amount ever recorded by the country, according to official figures.

South Korea is currently the biggest foreign investor in Vietnam with $2.32 billion, accounting for 28.7 percent of the total sum, followed by Japan with $1.29 billion, and Singapore with $808 million.