Foreign investment has sharply flowed into Vietnam

Dao Quang Thu, Deputy Minister of Planning and Investment said at a meeting to review the country’s FDI attraction during the 25-year period, that by February 2013, FDI disbursements had reached nearly USD100 billion.

FDI firms’ contribution to the country’s GDP had gradually increased year after year, reaching 19% in 2011, he noted.

The FDI sector contributed around USD3.7 billion to the state budget in 2012, accounting for 11.9% of total state budget revenue during the year.

The sector has helped directly create jobs for over two million people and indirectly for from three to four million people during the 25-year period, he said.

FDI firms were responsible for 45.2% in 2001 to 64% in 2012 of the country’s export revenues.

According him, there are several inadequacies in the sector as investment seemed to focus on industries that use a large number of workers and consume a lot of natural resources instead of high-tech industries.

Numerous FDI firms have tried to appear unprofitable to avoid taxes.

FDI investment in Vietnam remains still modest compared to several other regional countries such as Thailand, Indonesia and Malaysia. Just over 100 out of 500 trans-national groups operate in Vietnam, compared to 400 groups of such kind in China.

Capital disbursement was lower compared to registered capital, which was estimated at only 47.2%.

Most FDI projects in Vietnam remain small to medium-sized in scale, and averaged at USD15.4 million each during the 1988-2011 period, and falling to only USD13.47 million each in 2011.

A handful of FDI firms have used modern technologies for projects in Vietnam. Over 80% of FDI firms use medium technologies while 14% use outmoded technologies.

While average incomes of employees in the sector are higher than private sector overall, the incomes are still lower than the public sector.