4.

CONCLUSION The attraction and harnessing of FDI inflows by Vietnam has been a leading element of the economic transition process in Vietnam, and has played an important role in the country’s drive for economic development and poverty alleviation. 06 1354786042000207344.fm Page 217 Friday, May 7, 2004 9:36 AM Downloaded By: [La Trobe University Library] At: 02:29 6 May 2011N I C K J . F R EEMAN 218 Beyond the direct inputs and returns that foreign-invested enterprises have generated, such as new jobs, the technology, skills and expertise they ‘import’, the foreign exchange and the tax revenues they generate are all contributing to the development of the Vietnamese national economy. Looking ahead, and despite the growth of a more vibrant domestic private sector, the FDI sector is expected to continue playing an important role in the economic development of Vietnam. The extent of this role will depend in part on the provision of a host country environment that is attractive to increasingly mobile foreign capital. Some of the kinds of policy reforms proposed in the second part of this article, intended to assist Vietnam in continuing to attract foreign investment inflows, are gradually occurring. Various economic reform and business liberalization commitments that Vietnam has made – such as those under the ASEAN Investment Area (primarily relating to national treatment issues), conditions agreed under the current IMF loan programme, and the recent bilateral trade deal with the United States – will also help bring about positive changes to the host country business environment that will be welcomed by both foreign and local private investors alike. So, to some extent at least, the sort of FDI promotion policy agenda that is proposed above is already picking up some degree of momentum. However, improved coordination and enactment of these various initiatives would be expected to improve their positive impact on FDI inflows. This author also believes there is a role for creativity in the policy mix used to attract FDI inflows. In general, the Southeast Asian countries have tended to adopt a broadly uniform approach to their FDI strategies, despite the fact that they are often directly competing for foreign investment. While it would undoubtedly be sensible for Vietnam to broadly follow the pertinent aspects of ‘best practice’ adopted by a country like Singapore, which has a strong track record in the field of FDI attraction and promotion, there is also merit in seeking to identify new and innovative ways of encouraging foreign investment that are tailored to leverage the specific strengths of Vietnam. (Besides, what may have worked for Malaysia or Thailand in attracting FDI inflows during the 1980s, may not necessarily work for Vietnam in the new millennium.) Policies that excite and stimulate the creative and entrepreneurial instincts of foreign investors should be rewarded with greater FDI inflows, despite the presence of various host country obstacles. Vietnam might therefore be well-advised to consider re-designing elements of its current strategy towards foreign investment. Indeed, this may be necessary if Vietnam is to achieve the US$12–16 billion target it has set itself for foreign private capital inflows between 2001 and 2005.

Having now attracted a substantial community of foreign investors. their long-term presence and development in Vietnam will also be dependent in part on establishing sufficiently robust linkages with domestic suppliers.There is much that other developing and transition economies can learn from Vietnam’s experience in attracting foreign investment since the late 1980s. the importance of having a strong local corporate sector has risen. Vietnam’s experience would suggest that developing and transitional economies might be well advised to integrate their FDI strategies within a wider policy approach that seeks to create a conducive environment for the development of both domestic and foreign-invested companies alike . Ironically. and cognizant of what companies are seeking from host countries. in arguably seeking to meet the needs of foreign investors more than the domestic private sector (at least prior to 2000). towards more complex (equity. from the need to carefully manage foreign investor expectations and sentiment (both on the upside and the downside). As foreign investment activity has mutated away from conventional ‘greenfield’ projects. This in turn necessitates that policy-makers remain abreast of developments in the international business arena.and non-equity-based) linkages and production networks with domestic firms. Vietnam may have inadvertently exacerbated the decline in its FDI inflows after 1996. to providing the kind of host country business environment that is conducive to the new kinds of foreign-invested activity that have been emerging.

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