Foreign capital flowing
into Vietnam reached a record high last year, promising more economic growth
but more competition for domestic companies.
According to the General Statistics Office, there were over 2,000 FDI projects
with total capital of 15.6 billion USD, along with another 814 projects
expanding their investment to $7.2 billion by the end of 2015, a year-on-year
increase of 12.5 percent.
One of the most significant FDI projects was the Samsung Electronics HCM City
CE Complex, which received a licence to add 600 million USD late last year.
This additional capital lifted total investment for Samsung in Sai Gon
High-tech Park to 2 billion USD.
When it is finished, the plant will be one of Samsung's four biggest in the
The project is expected to improve human resources, develop local supply
systems, and increase domestic enterprises' competitive capability in joining
global supply chains.
Last year, the Republic of Korea became the biggest investor in Vietnam with a
series of huge projects at total capital of 2.67 billion USD.
'Foreign capital flowing into Vietnam in the context of deep integration
is a very good sign that can help the market become more competitive and force
local enterprises to reform and gain more market share,' economist Dinh
The Hien was quoted as saying in the Nguoi Lao Dong (The Labourer) newspaper.
'The problem is the efficiency of national and local policies to attract
foreign investment. New investment should avoid labour-intensive
industries,' he added.
The Vietnamese retail market is seen has having high potential thanks to the
population of more than 90 million and a growing economy.
Many Korean, Japanese and Thai retail groups have arrived in Vietnam, causing concern
among local enterprises that foreign commodities would dominate the market.
Many domestic companies admit that their biggest challenge in 2016 will be
competition with foreign goods in Vietnam.
Local enterprises that do not prepare well for the inflow of foreign capital
will lose, experts said.
'Integration with the world is a must, but small- and medium-sized
enterprises will only have a small market share while foreign companies will
take most of it,' Tran Viet Anh, Chairman of HCM City's Rubber and Plastic
Economist Dinh The Hien pointed out that in previous years most local
enterprises focused making money in 'hot' fields like real estate and
ignored their core businesses.
'Right now, benefits from real estate are not big enough and if local
companies do not increase their strength and competitiveness, they will have to
close their operation,' he warned.
'The government should set up a transparent business environment where
local and foreign companies can fairly compete. We should stop the situation of
foreign companies receiving many incentives, while local enterprises must
suffer many cumbersome and barriers,' he added.