Vietnam’s investment promotion has proved inefficient as some localities have gained at the expense of national priorities an official has said.

Do Nhat Hoang, Director of the Ministry of Planning and Investment’s Foreign Investment Agency

Do Nhat Hoang, Director of the Ministry of Planning and Investment’s Foreign Investment Agency (FIA) said at a seminar on the issue on March 15 that the country’s current investment incentive policies were not attractive enough to investors.

“Despite being regularly amended and supplemented, investment incentive policies have yet to get the balance right between the demand of industries and localities in need of investment,” Hoang noted.

He took investment policies for high-tech and support industries as an example, saying that they are not really different and attractive than for other industries.

According to him, some localities were only interested in their own short-term benefits, instead of looking for longer-term gains and projects that were in the national interest, having a negative impact on the economy.

“Some localities have licensed too many steel and cement projects, which have resulted in more serious power shortages due to increased consumption, as well as environmental pollution,” he said.

Previously, Vietnam could attract a lot of foreign investors thanks to its low-cost labour force, however, that factor was no longer a major draw due to the high rate of untrained workers.

He quoted the latest research jointly conducted by the department and the United Nations Industrial Development Organisation (UNIDO) that revealed that 32% of foreign investors said the lack of skilled workers was a major reason why they could not make full use of their manufacturing capacity.

Under the national socioeconomic development for the 2011-2020 period, the country will continue to prioritise foreign direct investment attraction. Due attention will be paid to high-tech projects, energy-saving and environmentally friendly industries, he added.