In the report Industrial Investment in Vietnam 2011 being distributed to gather opinions, UNIDO said FIA under the Ministry of Planning and Investment needs more authority to develop policies to gradually shift the focus from quantitative to qualitative development in FDI attraction.
The organization remarked under the amended Investment Law 2005, the responsibility for investment promotion has been delegated, to provincial governments and the management boards of industrial parks and export-processing zones, leading to the reorganization of FIA operation.
Brian Portelli an expert of UNIDO, said that this places FIA in an incorrect position in the information flow, leading to its lack of timely and reliable information on the actual operational efficiency of FDI.
There is an obvious competition among 63 investment promotion agencies for the same FDI source, said the report. Portelli said this may do more harm than good to the long-term economic targets of Vietnam.
It is clearly necessary that FIA should be given a stronger role of coordination to oversee foreign investment into the country and to avoid undercutting among localities in attracting FDI.
UNIDO's comment is similar to the recent evaluation of the Vietnam Association of Foreign Invested Enterprises (VAFIE). The association said after the investment promotion task was transferred to local agencies, FIA is unable to grasp the accurate and timely data on the country’s FDI situation, including updated registered capital and realized capital in each period.
In his recent talks with the Daily, FIA director Do Nhat Hoang admitted FIA only relies on the data of some localities and authorities of industrial parks and export-processing zones to look into the situation of the whole country. He added FIA is facing a severe lack of personnel for statistics collection.
At a recent press meeting to announce the conference on promoting the FDI quality scheduled for tomorrow, Hoang ironically brushed aside reporters' questions on how Vietnam would make changes to FDI attraction.
"You reporters should ask other ministries and localities on how the work assigned by the Prime Minister has been progressing,” he replied.
The Prime Minister has released Directive 1617 assigning related agencies and the localities to map out a scheme to improve FDI attraction, use and management efficiency in the period 2011-2020. The role of FIA is merely to receive reports of the relevant agencies.
The state management of FDI capital has recently attracted more attention of the media, especially the capability to tackle transfer pricing.
In its report, UNIDO noted the expected benefits of FDI in the Vietnamese economy is still limited due to multiple shortcomings in operation of FDI firms, such as the gap between registered and realized capital. Meanwhile, the slow process of technology transfer makes it unable to optimize the spillover effects and transfer pricing draws much criticism.
Moreover, the FDI portion is not as expected, as the sectors with much investment capital continue to receive more while the sectors that need investment are neglected.
Source: The Saigon Times Daily