Tenology transfer continues to be a big issue in luring FDI

Tenology transfer continues to be a big issue in luring FDI

The foreign direct investment (FDI) picture in the first half of 2018 has kept the black spot of technology transfer despite capital inflows increasing against last year.

Experts have been pointing out problems with technology transfer from foreign-invested enterprises (FIEs) to domestic firms. After 30 years of luring FDI, manufacturing with low localisation ratios and loose connections to local firms continue to be the industry receiving the highest amount of FDI, occupying 39 per cent of the total FDI capital.

Tran Toan Thang, head of the World Economic Committee, said that connections and technology transfer between FIEs and domestic firms remains limited.

The majority of enterprises taking part in the committee’s survey stated that they only receive technology from other domestic firms, while FIEs are less willing to share.

Accordingly, the firms stated that it is easier to receive technology from domestic firms than from foreign firms.


FIEs are not really willing to share their technologies with Vietnamese firms. 

In 2006-2015, only 600 technology transfer contracts were signed, which is only 4.28 per cent of the total 14,000 FDI projects. Vietnam’s position of effective criteria on technology transferring dropped from 57th (2009) to 103th (2014), while Malaysia ranked 13th, Thailand 36th, and Indonesia 39th in 2014.

Information from the seminar titled “Attracting and Transferring Technologies in the Foreign-Invested Enterprises” stated that the rate of firms using high-technology in Vietnam is only 20 per cent, lower than Thailand’s 31 per cent, Singapore’s 73 per cent, Malaysia’s 51 per cent, while the standard rate of using high-technologies to reach the targets of industrialisation and modernisation is 60 per cent at least.

According to baobinhdinh.com.vn, Kajima Kumagai Song Da Joint Venture Company of Japan-based Kajima Group and domestic Song Da Hydroelectric Company in 2003 developed the Dai Ninh Hydro Power Plant using Japanese technology to construct tunnel-rings from solid concrete.

However, after the plant was completed and put into operation in 2008, all technologies used to develop the plant were shifted to Japan by the contractor. In addition, during the construction, the domestic firm was not allowed to engage in the manufacturing of tunnel-rings.

Therefore, before FECON Mining’s successful testing on manufacturing tunnel-rings with the similar material in late 2015, the technology was still unknown, according to fecon.com.vn.

These issues are felt in many localities. Enternews.vn quoted a domestic firm’s representative as saying that sometimes FIEs use long-distance control technologies to construct the project in closed models.

Vov.vn also quoted Han Manh Tien, chairman of the Vietnam Association of Corporate Directors, that 3,000 firms of the association have not received any technology transferred from FIEs.

At the seminar, experts also pointed out that the Vietnamese authorities' policies encourage technology transfer but do not make it compulsory, which needs to be improved.


VietNam Investment Review

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