Reduced FDI attraction
There has been no significant change from the US-China trade war as the hope that FDI capital flows would shift to Vietnam (including Quang Nam) has failed to materialize.
There is no shortage of mechanisms and policies; there are many promotions at forums, conferences, and international markets. However, the results of attracting FDI projects in the locality are still not as expected. The number of investors and FDI enterprises coming to Quang Nam has been on a downward trend in recent years.
According to statistics from the Department of Planning and Investment, in 2020, Quang Nam attracted 10 FDI projects, but in 2021 it only attracted 7 FDI projects with a total registered capital of about 15.2 million USD. The number of newly licensed FDI projects decreased by 30%, but the total registered capital decreased by 60%.
This decline is understandable. The COVID-19 pandemic, which has led to social distancing for two years (2020 & 2021), has made it impossible to connect with investment agencies, embassies of other countries or organize promotion and investment attraction activities.
However, it was quite a "surprise" that when the pandemic ended, FDI attraction could not be more positive, although there was no shortage of trade connection and promotion activities at international investment forums, conferences and seminars.
The results in 2022 attracted only 5 FDI projects with a total registered capital of 68.24 million USD. In 2023, 4 more FDI projects were licensed with a total investment capital of 58.58 million USD, but 5 projects had to leave the market.
Signs of improvement can be seen in the first 9 months of 2024 when 8 FDI projects were licensed with a total registered capital of about 126.6 million USD, bringing the number of valid FDI projects to 199 projects with a total registered capital of about 6.2 billion USD.
According to the analysis of the Department of Finance, the economic recession caused by the pandemic, inflationary pressure, tight finance, and disrupted production supply chains have led to investors limiting new investments or expansion investments to avoid risks.
Lack of wastewater treatment infrastructure in industrial zones and clusters under development; compensation and site clearance difficulties lead to slow progress in infrastructure investment in industrial zones and clusters, affecting the creation of land to attract foreign investors. Some legal regulations are still overlapping, unclear and not specific, also affecting the results of investment attraction.
In addition, according to Ms. Phan Thi Thanh Thao - Deputy Director of the Department of Finance, the application of the global minimum tax rate initiated by the Organization for Economic Cooperation and Development (OECD) also greatly affects the attraction of FDI capital flows.
Large businesses and corporations around the world are being cautious and thoughtful in choosing countries to invest in, including Vietnam.
Quality over quantity
FDI has always been considered one of the important engines of national or local growth. Therefore, it is not difficult to understand that FDI has now become a driving force to help the economy recover. How to stimulate this engine to operate faster, stronger, and more effectively is still a matter of discussion.
In an interview with Quang Nam Newspaper, Chairman of the Provincial People's Committee Le Van Dung admitted that FDI attraction has not met expectations. The inauguration of the Karcher Group (Germany) factory in July 2024 is one of the encouraging signs, but it is still not commensurate with the potential and advantages of the locality.
However, the investment space in Quang Nam is very open. Many investors have expressed their desire to survey and seek investment opportunities in large, quality projects in the locality.
The names that were granted licenses and investment surveys were announced as: Cleaning equipment manufacturing factory (500 billion VND) of Karcher Beteiligungs - GMBH (Federal Republic of Germany), super white glass manufacturing factory (820 billion VND) of Uc Thinh Technical Development Company Limited (China), magnetic magnet factory (1,920 billion VND) of Star Group Industrial Company (Korea) or audio equipment manufacturing project (960 billion VND) of Guoguang Electric Company (China) paving the way for a new era of quality FDI projects.
Mr. Nguyen Hung - Deputy Director of the Department of Planning and Investment said that these are important projects, the concretization and realization of the planning will be a good signal for Quang Nam to attract more quality FDI investors.
According to Mr. Ho Quang Buu - Vice Chairman of the Provincial People's Committee, many foreign enterprises and large corporations are in need of investment in the locality. The Provincial People's Committee is reviewing and assessing the project to ensure it meets all the conditions for investment licensing.
Attracting FDI among localities in the region is becoming an increasingly fierce competition. Quang Nam’s viewpoint is not to wait for investors to come to it.
Localities will offer specific opportunity projects. Expand project absorption capacity with appropriate and favorable mechanisms and policies, proactively seek and hunt for investors and quality projects right at their headquarters.
“Attracting FDI will be more about quality than quantity. The government will cooperate with leading enterprises, proactively propose strong enough opportunity projects, identify investors with financial and technological capacity, through appraisal by specialized agencies, send people to directly meet and find real investors.
Investment projects create growth and revenue but must ensure the environment with advanced technology. Quang Nam is ready to eliminate projects using outdated technology, which can cause environmental pollution or affect national defense and security," said Mr. Buu.
FDI project quality control
The role of FDI cannot be denied, but the consequences are not small if looking at the reality of local investment.
Looking at the budget contribution of FDI enterprises, it is difficult to say that this is one of the pillars of the economy. Mr. Dang Phong - Director of the Department of Finance once shared that the province has nearly 200 FDI enterprises, but the annual contribution of only 1,200 billion VND is too small.
This business sector uses too much local resources, but the number of businesses with accumulated losses has always increased over the years. The budget and economic contributions are not commensurate with the local resources allocated to FDI enterprises.
Dr. Tran Dinh Thien (economic expert) believes that FDI mainly plays the role of a tool to implement the growth model, aiming at GDP speed, not prioritizing the strategy of improving growth quality, enhancing the technological level of the Vietnamese economy and enterprises. Have you ever been surprised when FDI enterprises continuously declare losses, but few FDI investors leave?
The history of attracting investment in the locality has always shown that FDI is still an irresistible attraction, leading to chasing quantity, thus "making it difficult" for oneself by offering too attractive investment incentives. The investment management agency confirmed that it is difficult to have specific statistics on the number of projects that are slow or have not yet disbursed and the capital implemented in investment projects that are rarely mentioned.
The management agencies easily examine projects, the financial capacity of investors, and easily grant licenses. As a result, some projects cannot be implemented because investors do not have enough capacity, and land is stuck in virtual projects for many years. As a result, the profit brought to the locality from FDI is not commensurate with the value of the permanent resources lost.
Choosing a path to attract FDI with a focus on quality is important. But it is important to answer the question: if in the future, foreign investors withdraw from the country for some reason - which is entirely possible, will Quang Nam be able to maintain the operations of these facilities at a certain level to continue to keep jobs for workers and ensure social stability?
The history of attracting investment has proven that the expected capital, market, and technology transfer have not happened. FDI has only stopped at the level of providing labor for low-cost processing and leasing of premises.
Quang Nam still needs resources from foreign investment. However, the government needs to control the quality of enterprises, not only to meet the requirements in attracting but also to eliminate FDI enterprises that do not meet investment requirements...
SONG OF THE HEART
Source: https://baoquangnam.vn/thu-hut-fdi-quang-nam-huong-ve-chat-luong-3141741.html
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