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Official Gazette

Thursday, December 8, 2022

Foreign investment projects “require careful evaluation”

Updated: 10:07’ - 27/04/2012

Vietnam needs to develop a set of standards to evaluate the effectiveness of foreign direct investment (FDI) to help policymakers improve the activities, according to a seminar held in Hanoi on April 18.

Ngo Doan Vinh, former head of the Ministry of Planning and Investment’s Development Strategy Institute, said the project would meet requirements of marco-economic analysis.

Evaluation should include labor productivity, capital utilization and contribution to the economy, he added.

The Provincial Competiveness Index (PCI) 2011, launched by the US Agency for International Development (USAID) and the Vietnam Competitiveness Initiative (VNCI), showed that foreign-invested enterprises in the country were mostly small in scale and operated at low profits.

The majority of foreign-invested firms included subcontractors for multinational companies, thus ranked at the lowest level of product value.

Chairman of the Vietnam Association of Foreign Invested Enterprises Nguyen Mai said the country has been slow in changing orientation in attracting FDI.

“We have not attracted investors despite a better investment environment,” Mai said, adding that it was time to utilize scientific criteria to evaluate the effects of FDI on the country’s development as well as improve quality of FDI inflow.

He said some foreign-invested businesses have taken advantage of transfer pricing mechanisms to report losses and invade corporate income tax to shift revenues and profits to markets where taxes are lower than in Vietnam.

“It needs to be confirmed that FDI is the most important international capital to Vietnam. The Government should have a clear message on FDI orientation in terms of quality and socio-economic effectiveness,” he said.-


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