Many localities have become more careful when attracting foreign direct investment (FDI) as they have laid out specific conditions and commitments for investors, will only select projects that are in line with their development objectives and will halt any projects that are way behind schedule.
According to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, although FDI projects contributed over 11 billion USD to the State budget during the period 2001-2009, several projects have had a number of shortcomings such as polluting the environment and importing out-of-date technologies rather than up to date ones which leads to projects operating inefficiently and failing to fulfill their commitments.
“Dragon Beach” project
In addition, many localities pay more attention to quantity rather than to the quality and structure of their investments, which affects not only themselves but many other sectors and ultimately the national economy.
Dr. Nguyen Mai, President of the Vietnam Association of Foreign Investment Enterprises (VAFIE), said that during the 1997-2010, Vietnam only attached importance to the amount of FDI projects but from 2011, the country will focus more on quality and efficiency.
Accordingly, the criteria for acquiring a FDI license will look for not just how many jobs will be created but if modern technologies are to be used in conjunction with supporting industries and hi-end services. Infrastructure projects and human resources training will also be taken into account.
Investors must now go through many strict assessments before receiving their investment licences, especially projects that demand large areas of land. Licensed projects that continuously record delays and a lack of progress will also have their investment licences revoked.
The recent announcement by Quang Nam provincial People’s Committee to withdraw the investment licences of four FDI projects in the tourism and hotel services sector due to their slow progress has confirmed what some localities now see as essential when issuing FDI licences.
The central province is also considering withdrawing the license for the US’s 4.1 billion USD “Dragon Beach” super-project, which is the fourth largest FDI project in Vietnam.
According to Le Tri Thanh, head of Quang Nam province’s Investment Promotion and Business Support Agency, the province’s new policy is to auction off land use rights in areas that are planned for FDI, including land from other projects that have been halted, to select investors with real potential.
FIA Director Do Nhat Hoang said that to overcome the shortcomings in FDI, there should be more measures introduced to control the quality of investments, including laws, policies, plans, promotions, infrastructure, human resources, state management and administrative procedures.
