The ongoing trade war between U.S – China, the world’s two largest economies have also prompted Chinese investors to look to Southeast Asia, especially Vietnam, complicating its FDI scenario and threatening to impact its businesses.
Vietnam’s Lawmakers urged the Government to devise plans to deal with the possible ramifications of the escalating US-Iran tensions and US-China trade war and the influx of foreign direct investment into Vietnam at National Assembly meeting on May 22, 2019 to discuss a Government report on socio-economic development.
Citing a Ministry of Investment and Planning report which shows that in the first four months of this year, FDI from China increased 241 per cent year-on-year, Hoang Van Cuong, a house member from Hanoi, said the Government should have a clear orientation on approving investments.
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Given the increasing number of medium- and large-sized Vietnamese companies shutting down in recent times, the local private businesses might face stiff competition from foreign businesses and the Government’s policy to promote private sector would flounder, Cuong said.
More than half of the 16,000 registered FDI businesses in the report ostensibly made losses but continued to expand their business or plan to do so, highlighting the need for stricter oversight of the sector, he said.
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Pointing out that investments made by certain countries are even lower than those of local businesses, he questioned the need to attract FDI indiscriminately and called for prioritizing hi-tech industries and creating value chains involving both FDI and local businesses.
On the other hand, the Vietnamese private sector should find new drivers of growth by producing “global values” instead of relying on exploitation of natural resources or real estate, he said.
According to VNS, many National Assembly deputies also expressed doubts about achieving the Government’s inflation target, given the recent electricity price hike and uncertainties in the oil market as a result of the US-Iran tensions.