More importantly, those projects must create positive spillover effects to the surroundings and strengthen linkages between FDI and domestic enterprises, Dung said at a teleconference on September 24 as reported by local media.

According to Dung, FDI is a critical part of Vietnam’s economy, for which the government is committed to reforming administrative procedures and improving investment environment. 

Dung, however, expressed concern over uncertainties of the world economy, coupled with fierce competition in terms of attracting FDI between countries in the regions. Dung predicted that the FDI inflow may not remain robust in the future compared to the previous years.  

As part of the government’s effort to increase high quality FDI, the Ministry of Planning and Investment (MPI) requested related government agencies to tighten the process of investment certificate issuance and foreign project management, Dung added. 

Additionally, Vietnam will no longer grant investment certificate for projects using outdated technologies, which potentially pose negative impacts on the environment. 

The MPI along with other agencies are expected to strengthen state management on foreign investment activities, particularly the inspection, examination and supervision for foreign investment projects of large scale using of many lands and their respective minimum investment rates. 

Those projects in subject with existing investment certificate will be reviewed and revoked if they are found violating the laws. 

Key role of FDI in the economy

Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE), stressed the importance of FDI for Vietnam’s economy, adding that “FIEs have played a key role in Vietnam achieving its socioeconomic development targets, in turn facilitating the shift and mobility of professions and trades in society.”

The FDI sector has shaped modern production, distribution, and consumption modes, Mai told Hanoitimes.

Sharing the same view, economist Vo Tri Thanh added, “Foreign invested enterprises (FIEs) have accounted for 22-25% of total social investment capital, over 72% of the country’s export turnover, and more than 50% of total industrial production value in recent years.”

“Moreover, most FIEs invest in high added value fields, such as processing, services, and finance and banking,” he noted. 

FDI commitments in 2017 totaled US$35.9 billion, up 44.4% year-on-year, while the figure was US$24.35 billion in the first eight months of 2018, up 4.2% year-on-year, reported the Foreign Investment Agency (FIA) under the MPI. 

As of August 20, disbursement of FDI projects jumped to US$11.25 billion, representing an increase of 9.2% year-on-year,

Investors have invested in 17 fields and sectors, in which manufacturing and processing continued to attract substantial attention with investment capital of US$10.72 billion, accounting for 44% of total capital approvals.

Real estate was the second most heavily invested, with US$5.9 billion, or 24.2% of total registered capital, followed by retail and wholesale with US$1.87 billion or 7.6%.  

The data shows that 97 countries and territories invested in Vietnam in the eight-month period, with Japan taking the lead with US$7 billion, accounting for 28.8% of total investment. South Korea came second with US$5.16 billion or 21.2% of total investment, while the third place belonged to Singapore with US$3.47 billion or 14%.