Contribution to the Second Generation FDI Strategy and FDI - SME Linkage

[22 September 2017] – After 30 years, FDI now plays a significant role in Vietnam’s economic development and international economic integration. Importantly, it is now a significant additional source of funds among total national investment capital, contributing to promote the shift in economic structure, increasing production capacity, renovating technologies, opening international markets, increasing export turnover, improving the country’s balance of payments, contributing to the State budget, developing high-quality human resources and generating jobs. The Government of Vietnam’s vision is to promote FDI with focus on high-tech, environment-friendly and less energy-consuming sectors, developing and using clean or renewable energy.

The need to bring about some degree of parity between foreign-invested and domestic firms while fostering increased linkages is increasingly emphasized in Vietnam. There is a general consensus in Vietnam that increased links between FDI firms and the nation’s SME sector, in particular, would facilitate the process of international integration on a fairer footing. The Government is mulling a strategy and multiple solutions for small and medium sized enterprises (SMEs) to connect with FDI enterprises.

In this context, the International Finance Cooperation (IFC) of the World Bank Group is initiating efforts to support the Government of Vietnam in formulating a “second-generation” FDI Strategy - one in which priority would be given to foreign firms with state-of-the-art, environmentally friendly technology, and with strong willingness, flexibility and capacity to connect with Vietnamese SMEs. In the framework of this initiative, Economica Vietnam experts have been working closely with international experts from the IFC and with government officials at MPI, MOIT, local governments in Ho Chi Minh City, Hanoi. Especially, Economica Vietnam will look deep into the legal constraints which hinder the linkage between domestic SME and FDI enterprises.

The Ministry of Planning expects that the first draft of the new FDI strategy will be ready for public consultation by the end of 2017. 

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