WTO to offer a world of opportunity
WTO membership could make Vietnam “the most attractive investment destination around the world.” But to get ready for the opportunity, the nation needs improvements in infrastructure, labour skills and national technology policies.
That was the message last week in Hanoi from UNDP officers at the launching ceremony of the United Nations Conference on Trade and Development’s (UNCTAD) World Investment Report (WIR) 2006, “FDI from Developing and Transition Economies: Implications for Development”.
“Membership in the WTO, the club of countries which account for 97 per cent of global trade, will be an important milestone for Vietnam,” said Jonathan Pincus, UNDP senior country economist.
“As long as Vietnam can guarantee the access to the club, the nation will become an attractive place for foreign direct investors to come to produce things both for export and the growing domestic market,” he said.
Pincus also pointed out that raised foreign direct investment (FDI) would be seen in traditional sectors of textile and garment, footwear, construction, financial service and natural resources.
“Vietnam is incredibly rich in natural resources, which are mostly under-exploited at the moment. We can expect large FDI inflows in the mining sector in Vietnam at a time when the demand for, and prices of, all minerals is going up,” Pincus said. UNCTAD’s 366-page report found that Vietnam received $2.02 billion in actualised FDI in 2005, an increase of 25.5 per cent, or $400 million higher than the previous year. But Vietnam’s FDI inflow growth last year was still lower than the 50 per cent average in Southeast Asia, up from $25.7bn in 2004 to $37.1bn in 2005, and growth in FDI inflow worldwide stood at almost 29 per cent, from $710.7bn in 2004 to $916.3bn in 2005, according to report.
Yet the UNCTAD figures differed markedly from the data collected by the Ministry of Planning and Investment (MPI), which reported $3.3bn in FDI implemented in 2005.
An MPI senior expert explained that UNCTAD did not take into account capital brought in from abroad in forms of patents, equipment, knowhow and trademarks.
“FDI data is definitely complicated. The complication is perhaps the result of differences in definitions in relation to FDI that UNCTAD and Vietnam are using. However, we are trying to be careful and make the international numbers consistent from country to country.
Such figures released by UNCTAD are globally accepted as the most reliable FDI data,” Pincus said. To economists, however, what is much more important is how Vietnam will make use of its FDI. “Vietnam needs to get ready to become a suitable host for both domestic and international investors, to make their business easier. Better infrastructure and telecommunication facilities, more highly skilled workers and stronger national technology policies are those things to make Vietnam more attractive,” Pincus said.
As for the FDI performance index, which is based on the country’s share in global FDI inflows and GDP, Vietnam’s ranking in 2005 was 53, a few notches above China, at 55, out of 141 economies tracked. But Vietnam has a long way to go to catch up with regional performers Hong Kong and Singapore, which dominate the top-five in the global FDI performance index.
Source: Vietnam Investment Review