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Innovation Needed to Attract More Foreign Investment

Participants discuss at the Second Senior Officials' Meeting (SOM II).

Within the framework of the Asia-Pacific Economic Cooperation (APEC) 2006 forum, the Second Senior Officials’ Meeting (SOM II) is convened in Ho Chi Minh City from May 22-30. As discussed in the meeting, many officials predicted that global investment in the coming years will continue to focus on developing countries. However, they also issued a warning of the flow of global investment out of APEC region.

The warning originated from signs of APEC member countries’ lagging behind in attracting foreign investment compared with other regions, especially Eastern Europe which recently integrated into the EU. This warning drew much of our attention when the foreign investment flow to Viet Nam in 2005 and the first months of 2006 has grown rally since recovery from the effects of the Asian financial crisis in 1997.

Foreign investment is a necessary source of development, not only for underprivileged and developing countries but also for rich nations. The US, for example, constantly seeks to draw investment funds from Japan, the EU, etc.

Speaking at the meeting, Mr. Roy Nixon, Head of the Investment Experts Group said, "Although Australia is a developed country, it still depends on foreign investment to develop."

The APEC region has long been acknowledged as a dynamic community, so what is the cause of the region’s possible lagging? High expenses for business formalities issued by APEC member countries, which account for 4-8% of the GDP, are the answer. The rocketing expenses were caused by corruption in these member countries. Thus, in order to reduce the expenses for business as well as investment formalities, we must solve the problem of corruption.

In such that reality, recommendations were given by many officials at the meeting, saying that the investment environment must be improved to be more favorable, and the innovation of investment and business regulation system is an essential task of every APEC member economy.

Improving the investment environment to attract foreign investors more effectively is currently a fierce competition. The regulations which control the innovation process must be clear and open. Besides, we should not compare with ourselves in the previous years to get complacent while carrying out the innovation task. We must compete with other neighboring countries because they are also reforming along with us. Now that the said out-flow possibility is becoming clearer in our vision, some radical inner changes must be made to create clearer, healthier, and more attractive environment for global investment.

By M.T – Translated by Trong Khuong

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