FDI yet to create high added value in Vietnam: legislator

By Vu Pham, Minh Hue
Wed, June 18, 2025 | 9:19 am GMT+7

Foreign direct investment (FDI) has not yet created high added value, primarily focusing on assembly and processing, said Nguyen Ngoc Son, a lawmaker from the northern province of Hai Duong.

Nguyen Ngoc Son, a lawmaker from the northern province of Hai Duong, speaks at the National Assembly's session in Hanoi on June 17, 2025. Photo by The Investor/Pham Thang.

Nguyen Ngoc Son, a lawmaker from the northern province of Hai Duong, speaks at the National Assembly's session in Hanoi on June 17, 2025. Photo by The Investor/Pham Thang.

The localization rate in the FDI sector remains below 30% in many manufacturing and processing industries, and there's a lack of strong linkages with domestic enterprises, Son told the National Assembly’s ongoing session on Tuesday.

The legislature's discussion centered on the implementation of the socio-economic development plan and state budget performance for 2024 and the early months of 2025.

In 2024, Vietnam's economy showed many positive signs. GDP growth reached 7.09%, exceeding the National Assembly's target, indicating robust recovery amid global economic fluctuations.

Total import-export turnover increased by 15.4%, with export turnover surpassing the $400 billion mark for the first time, affirming the dynamism of the production and export sectors. Disbursed FDI reached a record high of $25.4 billion, reflecting foreign investors' confidence in Vietnam's business environment.

However, alongside these achievements, Son noted that the economy faces many challenges. Specifically, growth remains dependent on traditional drivers like exports, public investment and FDI, while new drivers such as the digital economy, high-tech, and green economy have not yet been effectively leveraged. The digital economy's share in 2024 hit only 18-18.3% of GDP, he argued.

According to Son, the efficiency of public investment is still low, with only about 22.2% of public investment capital disbursed in the first five months of this year, lower than expected.

Thirty seven out of 47 (72.3%) ministries and ministerial-level agencies and 24 out of 63 (38.1%) localities had disbursement rates below the national average. Notably, seven localities disbursed less than 15%. Many key national projects progressed behind schedule, affecting the spillover effect of public investment on overall growth.

Meanwhile, domestic enterprises are still weak in competitiveness. Up to 98% of businesses are small and micro-sized. Statistics show that despite receiving timely support policies from the government, over 57% of these enterprises still struggle to access credit due to collateral requirements and complex procedures and limited capacity for technological innovation.

The quality of human resources remains a bottleneck, Son stressed, citing data from the General Statistics Office as showing that the percentage of trained laborers with degrees or certificates in 2024 was only about 28.3%, lower than many countries in the region. About 60% of businesses face difficulties recruiting workers who meet requirements for specialized expertise and soft skills.

“Some policies have not kept pace with reality. The implementation of new tax management methods for business households is still problematic. Administrative procedures in some places are still overlapping and lack synchronization across levels and sectors, hindering business activities,” the Hai Duong lawmaker said.

While significant progress has been made in amending the Land Law, Housing Law, and Real Estate Business Law, further review is needed, especially of detailed regulations, to thoroughly remove obstacles related to investment procedures, land allocation, and land valuation, he noted.

These challenges require the government to take specific actions, continue making institutional breakthroughs, innovate the policy-making mindset, restructure fiscal and monetary policies, enhance public investment efficiency, remove barriers for private enterprises, and have a strategy to attract high value-added FDI, Son highlighted.

This will not only maintain macroeconomic stability but also create a favorable foundation to strive for growth targets in 2025 and subsequent years, he added.

Registered FDI in Vietnam hit $18.4 billion in the first five months of the year, up 51.1%, while disbursed capital reached $8.9 billion, up 7.9%, according to the Foreign Investment Agency (FIA).

Of the total registered capital, over $7.02 billion (down 13.2% year-on-year) was newly-registered capital for 1,549 projects (up 14.1%).

About $8.51 billion, a 3.4-fold increase compared to the same period last year, was additional capital for 672 existing projects, up 27.8%.

Capital contributions/stake acquisitions reached $2.85 billion (a 1.8-fold rise) with 1,358 deals, up 6.6%.

The processing and manufacturing sector led the pack in terms of the number of newly-registered projects (accounting for 38.6%) and projects with capital expansion (57.8%). The wholesale and retail sector ranked number one in terms of transactions for stake acquisitions (nearly 41.3%).

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