Since the first foreign direct investment (FDI) project 3 decades ago, Vietnam has attracted more than 26,000 FDI projects, which have created jobs for 4 million people.
As Vietnam enters a new phase of development, there’s a growing demand for stronger links between FDI and domestic enterprises.
The Ministry of Planning and Investment says that since 1988, 128 countries and territories have invested nearly 330 billion USD in Vietnam. 58% of FDI projects are in processing and manufacturing, making up half of Vietnam’s industrial value and contributing three-fourths of total export turnover.
But this value chain has involved only a handful of domestic enterprises, which mostly do support processing goods in small volumes with low rates of localization and technological transfer. This is because of a weak connection between Vietnamese and FDI enterprises.
Minister of Planning and Investment Nguyen Chi Dung called on foreign companies to make it easier for domestic companies to join the value chain: “There’s a gap between FDI and domestic enterprises. FDI companies need to increase the linkage to enable Vietnamese company to thrive. On the one hand, domestic businesses need to upgrade their technology. On the other hand, the government must work to make it happen. Once FDI businesses create synergy and collaborate with domestic businesses, the Vietnamese economy can become self-reliant and sustainable.”
President of the Vietnam Chamber of Commerce and Industry Vu Tien Loc said technology transfer and linkage with domestic enterprises should be the criteria to for FDI attraction.
“VCCI and foreign chambers of commerce will map out a program to select Vietnamese enterprises capable of working with FDI enterprises. We cannot help all businesses, but we can help a selected group of businesses to upgrade their technology”, said Mr Loc.
World Bank Country Director for Vietnam Ousmane Dione called on Vietnam to take specific actions to forge a strong link between domestic and FDI businesses. He said the Vietnamese economy needs small and medium sized enterprises and favorable conditions should be created for both foreign and domestic businesses.
Economists say domestic businesses should be part of a supply chain model in Vietnam. This will help both FDI and local sectors to grow sustainably and contribute to Vietnam’s economic development.