Improving FDI quality through technology and innovation
After nearly 40 years of opening up to attract foreign investment, Vietnam is facing new development requirements. The guiding viewpoint of General Secretary and President To Lam at the National Conference to implement Resolution 10-NQ/TW not only emphasized improving the quality of FDI capital flows, but also showed an important shift in development thinking.
Talking to Lao Dong, Dr. Nguyen Quoc Viet - public policy expert (University of Economics, Vietnam National University, Hanoi) - said that this is a shift in development thinking. We are stuck at a low level of technology, a model of labor use and simple processing and assembly. That does not help Vietnam access new technologies, source technology, core technology as well as receive substantive technology transfer.
According to him, the internal capacity of the economy has not been improved commensurately. More than one million domestic enterprises, mainly small and medium-sized enterprises, are still limited in production, management and human resource quality, making it difficult to participate in high value-added orders.
Meanwhile, multinational corporations often bring with them existing supplier ecosystems to optimize costs and reduce risks, making it difficult for Vietnamese businesses to participate in the supply chain if they do not upgrade production capacity and technology.
Therefore, General Secretary and President To Lam's request to attract technology is not only limited to receiving modern machinery or production lines, but aims for a larger goal of forming the technological capacity of the Vietnamese economy itself.
Bringing Vietnamese businesses deeper into the value chain
General Secretary and President To Lam requested to strengthen links between FDI enterprises and Vietnamese enterprises. According to Dr. Nguyen Quoc Viet, the State needs to create a synchronous mechanism between support policies on infrastructure, land, energy, and human resources and commitments from FDI enterprises in expanding the supplier ecosystem in Vietnam.
We need to take the interests of foreign investors as a fulcrum to promote technology transfer and spread the effectiveness of the FDI sector to domestic enterprises" - Dr. Nguyen Quoc Viet assessed.
General Secretary and President To Lam has repeatedly emphasized that the goal of the new development stage is not to attract foreign investment at all costs, but to "turn those resources into the capacity of the Vietnamese economy". This is the fundamental difference between the new direction and the previous approach.
If the quality of foreign investment capital flows is not improved, Vietnam will continue to fall into the "trap" of only absorbing investment at a low level, based on the advantage of cheap labor and standing at the bottom of the production value chain" - Dr. Nguyen Quoc Viet analyzed.
The new viewpoint is not only to improve the efficiency of FDI capital flows but also to create a spillover effect on the entire economy. Issuing new policies is only a necessary condition. A sufficient condition is that specific support programs must help businesses participate in the supply chain, receive technology transfer and strengthen links with FDI enterprises.
Agreeing with this view, Dr. Nguyen Minh Phong - former Head of Economic Research Department, Hanoi Institute for Socio-Economic Development Research - said that one of the prominent new points in the direction of General Secretary and President To Lam is the strong shift from FDI attraction thinking to building an economic development ecosystem with foreign investment capital.
The goal is no longer to attract FDI for each locality or each time, but to take quality and investment efficiency as the ultimate goal" - Dr. Nguyen Minh Phong emphasized.
