Promoting FDI businesses’ role in boosting exports
10:50 | 05/11/2019

VGP – In recent years, Viet Nam’s exports have reported impressive growth results, with the foreign direct investment (FDI) sector accounting for the majority in the structure of export revenue and having significant impacts on the sustainability in export growth as well as on Viet Nam’s autonomy in development.

Foreign investment has positively affected the expansion of the export market

Rising power of domestic businesses

According to the Ministry of Industry and Trade (MOIT), the policy of encouraging foreign investment towards exports has facilitated Viet Nam’s access to the international market and clearly improved its export capability, especially in the industry, thereby helping the country to step by step participate in and improve its position in the global value chain. In 2001, exports of the foreign-invested sector represented 45.2% of Viet Nam’s total export turnover, including crude oil. The export proportion of this sector has increased gradually and become the main factor accelerating exports, reaching about 57.2% in 2007 and about 71.4% in 2018.

In the first 9 months of 2019, the domestic sector continued to be a bright spot in Viet Nam’s export activities with a growth rate of 16.4% (to US$59.6 billion), doubling the national average growth rate (8.2%) and over three times higher than the growth rate of the FDI sector (5%).

This result shows that the efforts to improve the investment environment and international economic integration have really worked, creating favorable conditions for enterprises’ production and operations, especially those in the area of industrial production.

On the other hand, the FDI sector’s participation in export has affirmed the great effects and contributions of the sector to Viet Nam over recent years.

Specifically, foreign investment has contributed to changing the structure of export commodities in the direction of reducing the proportion of mining products and primary goods and gradually increasing the proportion of manufactured goods (electronics, computers and components, and products from plastic, wires and cables, bicycles and accessories).

Before 2003, crude oil accounted for nearly half of the FDI sector’s exports, but since 2007, the proportion of crude oil in total export revenues has stood at only about 7%, reflecting the adjustment of the foreign investment structure towards export-oriented manufacturing activities.

Also, foreign investment has positively impacted the expansion of the export market, contributing to stabilizing the domestic market and limiting trade deficit.

Promoting FDI firms’ role in boosting exports

The MOIT said that it would perfect institutions and create conditions for FDI companies to own high-value and high-tech production lines and products to invest in Viet Nam.

In addition, the ministry will focus on promoting the spillover effects of FDI firms toward domestic production, while facilitating domestic enterprises to participate in the global production and value chains.

To accomplish this, the MOIT calls on large FDI businesses to establish joint venture, develop supporting industries and increase the localization rate through domestic suppliers.

The FDI firms are also encouraged to transfer modern technology and management skills to domestic companies through joint venture projects and cooperation in a number of important areas of the economy in accordance with international standards./.

By Vien Nhu

 

 

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