Creating new competitive edge to attract FDI

Although the world economy continues to struggle and the global flow of FDI has yet to recover fully, FDI pledges to Vietnam have risen 36.1% compared to the same period in 2012.

Of the US$15 billion pledged from January-September, US$9.1 billion was poured into newly registered projects, underscoring the confidence that remains among foreign investors in the business environment in Vietnam.

Disbursement also continued to rise, with the US$8.6 billion of disbursed FDI in the first nine months of the year representing a 6.4% year on year increase and approaching the entire 2013 target of US$10.5-11 billion.

As domestic resources are scarce, the amount of FDI disbursement plays a significant role in raising total social investment, improving the balance of payments and increasing foreign reserves.

In addition, FDI projects are an important driver of export growth. Over the past nine months, export revenue in the foreign sector reached US$63.9 billion, up 22.4% from 2012 and accounting for 66% of the national total.

So far, FDI can be considered a bright spot in the economic picture of 2013. However, there is no room for complacency as Vietnam faces fierce competition from several neighbouring countries; notably Myanmar, which is emerging as a new attractive destination for investors. Meanwhile, Vietnam's competitive advantages, such as cheap labour and resources, are wearing thin.

In this context, it is urgent for Vietnam to develop new competitive advantages; specifically, high quality human resources, modern infrastructure and an effective legal system. These advantages cannot be gained overnight, but require an effort, money and a long-term process.

But if Vietnam hesitates and fails to improve its investment environment, it will miss opportunities to attract new FDI flows. Only when the investment climate becomes more competitive can Vietnam shift from attracting as much FDI as possible to selecting high-tech, advanced and environmentally friendly projects.

(Source: Nhandannewspaperonline)