After the Ministry of Planning and Investment announced that newly registered and increased FDI capital equalled 61.4% and 39.3% of the corresponding figures in the first quarter of 2013, there was growing concern about the prospect of FDI attraction for the whole year.

Several economists even feared there is unfair competition between FDI and domestic businesses when the former outplay the latter in terms of exports, industrial production and services development.

Professor Nguyen Mai, former deputy chairman of the State Committee of Cooperation and Investment, now the Ministry of Planning and Investment, told Vietnam Investment Review domestic businesses are the mainstay of the national economy in international integration.

He said the government needs to introduce more effective solutions to save businesses in difficulty and stimulate business development by heavily investing in technology and human resources, so as to increase the competitiveness of the economy both at home and abroad.

However, Mai agreed international integration requires Vietnam to attract foreign resources such as official development assistance (ODA) and FDI to support national development. Combining internal and external resources is a correct policy of the Party and State that has been carried out during the past more than two decades. 

FDI shifting trends

Despite a considerable fall in FDI in the first quarter, Mai said Vietnam still has the chance to lure FDI to high technology, high-end services, and support industries.

Vietnam has political stability and security, high economic growth potential, and cheap labour costs compared to other regional countries like Thailand or Malaysia.

Malaysia recently changed its FDI policies, targeting domestic business development. Meanwhile, Thailand’s political instability, increased labour costs, and severe floods forced foreign investors to move their production bases to other countries.

China, the world’s second largest economy that has attracted approximately 50% of FDI into developing countries, is meeting a big challenge for investors from the US, Japan, Europe and the Republic of Korea, resulting in the China + 1 policy.

Judging from the current context, Vietnam is considered a good choice for opening key production bases by several leading multinational corporations (MNCs).