Selective and directional attraction of foreign direct investment (FDI) capital requires an innovative investment promotion approach, higher quality and focus on transnational corporations to capture source technologies and on technology transfer and environmental friendly projects.
According to the report released by the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, the disbursement of FDI capital set a monthly record of US$1.4 billion, bringing the total disbursed FDI amount to US$2.5 billion in the first quarter of 2010, up 13.6 % over the same period in 2009.
 
This is a good result given unclear recovery of global economies. More importantly, the FDI disbursement tends to increase in 2010, with US$400 million in January, US$700 million in February and US$1.4 billion in March.
 
Channelling capital into supporting industries
The Ministry of Planning and Investment said Vietnam will direct FDI capital to important fields such as supporting industries, infrastructure development and human resources development in 2010. Other orderly prioritised fields are agricultural processing, highly value added services, energy-saving industries and export-oriented industries. To accomplish this policy, local authorities play decisive role after investment licensing is decentralised.
 
Mr Vo Tri Thanh, Deputy Director of the Central Institute for Economic Management (CIEM), said: FDI capital should invested for the service and production sectors and for improvement of economic competitiveness for sustainable development. This is a matter of our concerns. To a certain extent, in the past years, a very large amount of FDI capital has been injected into the real estate sector. Although the potential of this market remains huge, we need to channel foreign finance into other sectors such supporting and processing industries.
 
In addition to selecting and improving the efficiency of investment projects, the FDI attraction in 2010 must be closely associated with the economic restructuring and directed to specific industries and products to serve economic restructuring to maximise the effect of this capital source.
 
To do so, we need to build a master FDI attraction plan associated with other plans like regional or industry planning to direct FDI flows. Besides, we need to create a more attractive investment environment by advancing administrative reform, upgrading infrastructure, reforming education and training system to meet the demand for high quality human resources.
 
Opening service market
According to Nguyen Mai, Chairman of FDI Business Association in Vietnam, the service sector is increasing its proportion in global trade. Service fields include tourism, finance, medicine health care, etc. In developed economies, these services usually account for above half of GDP. The Vietnamese service sector remains underdeveloped and still has a wide room for development.
 
In Vietnam, the opening of service market for foreign investors will help diversify and improve the quality of services, thus powering up economic growth enhancing the competitiveness of Vietnamese goods. In contrast, the growth and development of service industries will also help Vietnam increase the attractiveness and competitiveness when it attracts FDI capital into in other economic sectors.
 
The attractiveness of service sector is very high. According to United Nations Conference on Trade and Development (UNCTAD), services make up about 70 % of global trade. This means that if Vietnam wants to attract investment capital from developed countries, it must open up the service sector.
Minister of Planning and Investment, Vo Hong Phuc, stressed: “We need to be more active and hurried to catch this trend and to apply all necessary measures to take advantage of investment opportunities as well as restructure the portfolio.”
 
According to a 2010 report by the UNCTAD, Vietnam is one of 15 most attractive destinations for FDI capital flows in 2010. The fresh foreign capital is estimated at US$19 billion and additional investment capital at US$3 billion in 2010