Under a draft assessment of FDI, with orientations to 2020, the Ministry of Planning and Investment has proposed to adjust incentives to bring investment to sectors targeted in development plans, he said, noting that incentives could also be targeted to environment-friendly projects and projects in industrial zones, export processing zones and high-tech parks. Investment incentives in the past have attempted to draw investors to high-tech industries or infrastructure but failed co-ordinate with planning for those sectors, Hoang said.

Foreign direct investment (FDI) declined 33.9 per cent in the first eight months of the year to US$8.47 billion, driven down by the sluggish world economy and the greater competitiveness of neighboring economies at attracting FDI, according to the ministry.

Disbursements of FDI have also slowed, with many provinces and cities revoking the investment licenses of projects that have been slow to disburse capital, especially the southern province of Ba Ria-Vung Tau, which has set a target to attract US$500 million in newly registered FDI this year, while promoting disbursement of $27 billion in 298 projects approved in past years.

Some other provinces, such as Quang Ninh, Binh Dinh, Hung Yen, and Bac Ninh, as well as the city of Da Nang, are reviewing all licensed foreign-invested projects that have seen slow implementation, seeking ways to reasonably supports these projects or to revoke the licenses of those without the financial capacity to proceed.

Together with standard investment incentives, the nation needed a system of flexible investment incentives aimed at strategic foreign investors, especially multinational corporations, Hoang said. These investors could spur the development of needed support industries Vietnam, and the right incentives could encourage them to invest more heavily in technology here.

Deputy Minister of Science and Technology Nguyen Van Lang said technology should be the highest priority in targeting foreign investment, since technology would help the nation improve its competitive capacity, access regional distribution chains and achieve sustainable development.

Vietnam Institute of Economics director Tran Dinh Thien said Vietnam should ensure basic conditions for foreign investors, including a proper legal framework for business operations, sound infrastructure, and a trained workforce with proper management and technological skills.

To improve the efficiency of foreign investment and increase disbursements, Pham Thai Son, head of Hung Yen Province’s industrial zone management board, also suggested that investment licenses should only be granted once an investor has disbursed investment capital in accordance with a project’s investment registration.