The Politburo’s Resolution 50 on the direction of perfecting institutions, policies, improving the quality and efficiency of foreign investment cooperation by 2030. Accordingly:

• Attract FDI selectively, taking quality, efficiency, technology and environmental protection as the key selection criteria.

• Prioritize projects characterised by advanced technology, new technology, high technology, clean technology, modern management, high added value, and pervasive impact connecting production and supply chains all over the world

“In other words, the selection of high-tech, advanced knowledge and high value-added chains FDI projects is necessary and the most important condition in this breakthrough opportunity”, Ph.D Bui Trinh said. He also mentioned that recently, Prime Minister Nguyen Xuan Phuc decided to set up a special task force to draw in “eagles”, referred to projects from large, high-tech multinational corporations, leading the supply chain.

Everyone knows that the most important contribution of FDI to the local economy is the technological and technical transfer and diffusion – an essential element for the development and prosperity of each country. If high-quality FDI inflows are attracted, the spillover effect and added value will obviously be enhanced. However with the limited time and resources, many experts find that we can only focus on a certain number of priority targets. Specifically, Vietnam needs to take advantage of the trend of moving global production chains post Covid-19 to attract FDI into the pharmaceutical industry, finance – banking, manufacturing electrical and electronic components, … Such as:

• Pharmaceutical industry: Mr. Vu Tu Thanh, Deputy Regional Executive Director, US-ASEAN Economic Council said that Vietnam has created a very good “brand” on coping and controlling the Covid-19; therefore, the production of pharmaceutical products, equipment and medical supplies has great opportunities in attracting investment. He added that US medical and pharmaceutical equipment companies are looking to invest in Vietnam and Indonesia, two countries with great potential both in consumer markets and labor skills.

• Electrical: FDI can transfer and spread technology in many forms, through many channels, including the R&D stage that FDI enterprises conduct in their home countries. According to Professor Phan Minh Ngoc, even in Vietnam, although it is still very limited, there have been a number of large multinational enterprises such as Samsung, HP, Bosch, or Panasonic establishing R&D facilities there.

• When a multinational corporation wants to implement investment projects with advanced knowledge, they will look at local human resources instead of just focusing on preferential policies.

• In contrast, the intellectual labor force is also attracted and looking for opportunities in countries where high-tech and advanced knowledge enterprises are present, instead of outdated projects causing environmental pollution.

The desire to attract high quality FDI is justified but in the opposite direction, it is necessary to consider whether Vietnam has enough necessary foundations for this capital inflow?

“To take advantage of China plus one opportunity with Vietnam, there are still many challenges, of which the biggest challenge is the infrastructure for the economy. Weak infrastructure, particularly transport and energy infrastructure, continues to be a “bottleneck” that has not been solved for many years”, Mr. Nguyen Quang Dong, Director of the Institute of Policy Development and Communication said.

According to Ph.D Bui Trinh, when a multinational corporation wants to carry out projects with high brain content in a country, firstly, they will look at the human resources here. Vietnam has a plentiful labor force but seriously lacks highly qualified human resources to adapt to “high-class” projects as well as meet the increasingly stringent demands of investors.

Most experts and businesses say that Vietnam has a lot of work to do to attract foreign capital inflows in the “high-end” segment. Representative of American Chamber of Commerce in Vietnam (AmCham) said that before moving to Vietnam, big technology companies in the world, need to see the business environment here encourages innovation. According to representatives of the European Chamber of Commerce and Industry (EuroCham), foreign investors are still “headache” about issues of intellectual property rights protection, administrative procedures reduction, license reduction… in Vietnam.

In addition, experts believe that regulatory agencies should urgently specify policies to attract high-quality FDI. The total time for foreign businesses to stand outside, excitedly expected in Resolution 50, is now nearly a year. “If there is a Resolution but still slowly,straightforward action, then Vietnam will ignore the golden opportunity, only one hundred years”, Ms. Nguyen Thi Thu Trang, Director of the Center for WTO and Integration said.

The above “bottlenecks” cannot be resolved overnight. In fact, in the short term, it is difficult for Vietnam to attract FDI capital into high-tech industries and participate more deeply in the global value chain. Policies to attract FDI, therefore, need to aim for the harmony between quantity and quality, between short-term and long-term.

Although Vietnam is losing the advantage of cheap labor, the room for creating jobs is still considerable. By the end of quarter 2/2020, the number of unemployed laborers nears 1.2 million; number of underemployed laborers surpasses 1.2 million. In the first half of this year, there were a total of nearly 500 thousand employees applying for unemployment benefits.

“Recently, PouYuen Company has laid off nearly 3,000 employees, which gave rise for concern among HCM city leaders. By this, we still have to prioritize labor-intensive FDI projects in addition to attracting high-quality capital, transfer and diffuse technology – one of the preconditions to building domestic technology capacity”, Mr. Nguyen Quang Dong, Director of Institute for Policy Studies and Media Development said.

Policies to attract FDI, in any period, must “know who we know” to succeed. In the “new normal” context, we “should not blame processing, because of the fact that we are still underemployed and this problem must be solved”, Mr. Dong emphasized; but with that, “Vietnam must quickly remove the inherent bottlenecks to attract high quality capital”, Ph.D Bui Trinh said.