Vietnam need to tighten regulations on FDI to prevent Chinese FDI projects coming with cheap labor, intensive use of natural resources and destruction of the environment, experts said. Texhong Group is the most notable name among Chinese investors in Vietnam, with a $300 million fiber plant in Quang Ninh Province, which went into operation in 2013.
In 2014, Texhong kicked off the project to build the Texhong Hai Ha Industrial Zone, also in Quang Ninh, with a total investment of $215 million and poured $300 million into a chain of textile plants inside its industrial zone. To serve the secondary projects here, Texhong is also preparing to build a 2,000MW thermal power plant.
The Chinese group planned to invite about 200 Chinese enterprises to invest in its IZ in Quang Ninh, aiming to turn this IZ into a close textile-garment chain in Vietnam.
According to the Foreign Investment Agencyâ€™s statistics, Chinese FDI registered in Vietnam rocketed from $312 million in 2012 to over $2.3 billion in 2013. In January 2016, FDI China ranked third with $179.51 million.
Dr. Nguyen Duc Thanh, Director of the Institute of Economic and Policy Research, the Hanoi National University, said that Chinese capital was flowing around the world, not only to Vietnam. As a neighbor of China, the flow is stronger.
China has capital but does not have modern technology like Japan and South Korea so its FDI focuses on exploitation of natural resources and cheap labor. Such projects donâ€™t benefit Vietnam.
Economist Bui Trinh said that by welcoming Chinese FDI coming with outdated technology and exploitation of natural resources, Vietnam would lose natural resources while the countryâ€™s environment would be harmed. The problem has been considered for a long time but it has not been resolved.
Dr. Tran Dinh Thien, Director of the Vietnam Institute of Economics said Vietnam was excited about integration and has forgotten the tragedies that can happen later. Vietnam need to tighten regulations on FDI to prevent such projects.
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