Foreign investors use Vietnam as springboard for exports

Late last year, an article in Nikkei said that to take advantage of opportunities from the Trans-Pacific Partnership (TPP), the world’s biggest shoe processor - Pou Chen (Taiwan) - has been gradually shifting its production bases to Vietnam since 2012.

The textile industry also witnessed the landing of large textile corporations, including the competitor of Pou Chen in Taiwan - Feng Tay -  and the major manufacturers in the world such as Hanesbrands (the US), Onewoo and Panko (the Republic of Korea).

In fact, moving factories to Vietnam where there is cheap labor to wait for the opportunities given by the TPP is the way that many foreign companies are pursuing in order to use Vietnam as a springboard to enter major markets in the TPP.

Some experts are afraid that this phenomenon will affect profit from Vietnam’s key export commodities. Some others said Vietnam should have appropriate policies to "borrow" this source of capital to develop the local economy along with strict commitments on technology transfer.

Discussing this issue, the Ministry of Industry and Trade spokesperson - Deputy Minister Do Thang Hai - acknowledged the situation but he said the increase of foreign investment in this way also benefited Vietnam.

He said exports of the foreign-invested sector were a bright spot in the overall economic picture of Vietnam last year. The part of this sector in Vietnam’s total export revenue has increased in recent years, from US$34 billion (representing 49.4% of total national exports) in 2010 to US$110.59 billion (accounting for 68.2%) in 2015.

"Thus, we can say FDI plays an important role in the economy and export turnover of Vietnam. In recent years many foreign enterprises has paid attention to Vietnam and moved to Vietnam because they saw great opportunities in our country when Vietnam signed big FTA agreements such as the TPP or the FTA with the EU, etc ...," Hai said.

He also said that this was an opportunity to develop the supporting industries, the task that Vietnam has been unable to fulfill for years owing to lack of capital and technology.

In the process of integration, Vietnamese enterprises will have the opportunity to gain access to international investment capital to expand investment and production and approach modern technology and management skills of developed countries.

At the same time, under the pressure of fierce competition in the context of globalization and participation in FTAs, only strong businesses can compete with foreign firms.  Therefore, this is also an opportunity to force domestic enterprises to re-evaluate themselves, to find solutions to improve their competitiveness to survive.

"However, to benefit from foreign investment, we need to have the appropriate policies. Therefore, depending on the stage of development of the country, we must have policies to encourage investment in selected areas," the Deputy Minister said.