Hanoi, July 9, 2018—IFC, a member
of the World Bank Group, is supporting Vietnam to unlock the next generation
of foreign direct investment (FDI) to sustain the country’s rapid economic
development, competitiveness and inclusive prosperity.
The Recommendations on Vietnam Next Generation FDI Strategy and
Vision 2020-2030, launched by IFC and the Ministry of Planning and
Investment (MPI) today in Hanoi provides findings and recommendations to
serve as key inputs for the government to develop Vietnam’s new national
FDI approach, part of the country’s strategic documents such as the Socio-Economic
Development Strategy (2021-2030).
While open-door investment and trade policies have led to increases in
FDI inflows, employment opportunities and diversification of exports —
especially in the last decade with annual FDI inflows rocketing by almost
ten times to outperform most regional competitors — this new report responds
to a growing realization that Vietnam requires breakthrough reforms to
compete for higher quality streams of FDI.
“The challenge we face is unique, as record FDI inflows contrast with
still limited spillover and value- added benefits. We believe the recommendations
outlined today will underpin a new national approach to FDI and contribute
to achievement of national development goals,” said MPI Vice Minister
Vu Dai Thang.
Developed in partnership with the Switzerland’s State Secretariat for
Economic Affairs SECO, the strategy, in particular, responds to recent
findings that FDI in Vietnam is substantively driven by low labor costs
and generous incentives. In fact, investors have identified a lack of skilled
labor as an impediment to growth, while the absence of integrated local
supply chains has further blunted the competitiveness of firms as has the
lack of qualified domestic suppliers and effective policies to assist local
“By addressing these issues, the government is likely to unlock more opportunities
for Vietnam,” said Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia
and Lao PDR. “The core analysis involved an intensive review of potential
priority sectors. It aimed to identify which sectors — and under what
circumstances — represent the most competitive opportunities for Vietnam
to attract investment (FDI and domestic), create both more and better jobs,
and increase sourcing from local firms.”
Having emerged from a qualitative survey and stakeholder consultations
on FDI strategy, the report’s recommendations translate into eight proposed
An immediate priority is adoption of concrete policies that increase FDI
linkages and spillovers, with a focus on introducing policies to increase
FDI linkages and targeted supplier development programs.
In line with meeting the challenges and opportunities of Industry 4.0,
Vietnam should aspire to a business environment commensurate with business
needs in the digital age. Instead of “playing catch-up”, this reset should
offer a superior investment climate and operating experiences with digital/online
solutions compared to regional competitors.
Other recommendations include creating and implementing an integrated national
skills development plan to accelerate Vietnam’s transition from low to
skilled labor; modernizing investment promotion, moving from reactive to
proactive promotion in priority sectors; overhauling current incentives
frameworks; opening up important sectors that underpin competitiveness
and growth; and introducing strategic outward FDI promotion policies.
Above all, a strong FDI focal point agency with the proper profile, influence,
organizational structure and budget is key to ensuring effective implementation
of all these recommendations.
IFC—a sister organization of the World Bank and member of the World Bank
Group—is the largest global development institution focused on the private
sector in emerging markets. We work with more than 2,000 businesses worldwide,
using our capital, expertise, and influence to create markets and opportunities
in the toughest areas of the world. In FY17, we delivered a record $19.3
billion in long-term financing for developing countries, leveraging the
power of the private sector to help end poverty and boost shared prosperity.
For more information, visit www.ifc.org