Over the past 22 years, nearly US$60 billion of foreign direct investment (FDI) has been disbursed. In 2009, FDI-funded businesses accounted for 18.33 percent of the country’s GDP, contributing US$2.5 billion to the State budget and providing jobs for 2 million workers.

However, management agencies still find it difficult to control the inflows of FDI effectively. Many experts have warned snags in attracting and implementing FDI-funded projects due to Vietnam’s failure to monitor and inspect the operational efficiency of those projects.

The story about Vedan Vietnam Enterprise Corp compensation for farmers suffering from pollution caused by Vedan in Dong Nai is a case in point, said Nguyen Van Bat, a consulting expert and General Director of Invest Consult Company in a recent interview granted to a Radio Voice of Vietnam (VOV) reporter.

Reporter: Vietnam has made headway towards attracting FDI. However, there is growing concern about the ineffective management and use of FDI. What is your opinion?

Mr Bat: In my subjective opinion, there are some problems in attracting FDI in Vietnam. The rise and fall of FDI depends on the development of the global economy. Therefore, we need to be continuously updated with this.

In some cases, we still lack experience in properly assessing investors or partners who play a key role in carrying out projects, particularly major project worth billions of US dollars. Therefore, we should have a critical evaluation of different aspects of FDI-funded projects.

Reporter:  All FDI-funded projects are examined by State agencies before they are licensed to operate in Vietnam. But why are there problems with the appraisal of those projects?

Mr Bat: Project appraisal is a difficult process that should be carried out in a scientific way. Previously, the granting of investment licenses to major projects belonged to the Ministry of Planning and Investment. Now that, this task has been assigned to local authorities, we are unable to help them appraise large-scale projects.

Reporter: Many provinces tend to offer incentives to investors, especially after being allowed by the government to grant investment licences. Do you think decentralisation works? And how to deal with the existing problems?

Mr Bat: I think that the Government and the Ministry of Planning and Investment (MoPI) should set up a centre to appraise investment projects in each region, instead of each province. The centre will be responsible for assessing levels of capital, partners, technologies, socio-economic consequences, and even security and defence.

I think that the Government and the MoIP should research and rationalise the appraisal process for major projects. They must also help improve appraisal skills.

Reporter: Does FDI attraction have any hidden “traps”?

Mr Bat: I think it has. We have to be wary of high-tech fraud or traders who sell fake products. These are big problems.

Generally speaking, the world is friendly and safe. However, we are not quite clear about what should be done to fulfill our integration commitments in a flexibly and proper manner. For example, we did not have a far-sighted policy when accepting VEDAN’s requirements too easily in the 80s and we are now suffering from its consequences. This shows that we were not good at foreseeing marcoeconomic issues, including those related to the environment.

Reporter: FDI is sometimes limited. For instance, some projects are carried out very slowly, even given concessions. Some foreign investors registered to invest in Vietnam and then sought to attract domestic capital. Is it high time we chose the projects carefully?

Mr Bat: We need to balance the macroeconomy and come up with proper plans to foreign investment. It is the Government’s duty, especially the Prime Minister’s, not the provinces’. Provincial leaders will assist the Prime Minister to deal with macroeconomic issues. As a researcher, I propose that the Prime Minister balance the additional source of FDI funding and allocate it properly to different localities to help them achieve a suitable growth rate.

Reporter: The Government is planning to restructure the economy. So does FDI need restructuring?

Mr Bat: FDI merely adds impetus to the national economy to develop. How much of funding is enough or when and where it is needed – all depends on the Government’s plans.

I think we simply consider foreign investment as normal funding, not a magic bullet. It is the inevitable result of developing commerce, no more than it deserves to be.

Reporter: Thank you very much.