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Strapped US firms ‘fail to follow up' on investment commitments
The US may be the biggest investor in Viet Nam but much of its investment capital remains on paper.
In 2009, for instance, US investors committed US$9.8 billion but have so far brought in only a fraction of that amount.
Tuoi Tre newspaper said it was because the investors did not possess real financial strength and went around trying to raise capital after getting the licence.
One such project is the $1.3 billion theme park licensed to be built by Good Choice in southern Ba Ria-Vung Tau Province. An official from the province's Department of Planning and Investment (DPI) said the project was being reassessed and considered for licence revocation since no work had been done on it yet.
A former DPI official said: "I am sceptical about projects capitalised at above $500 million, even more so if it is $1 billion."
During his 20 years working at the department, except for a few projects like Intel's, most others involving a few hundred million dollars had problems, he said.
"In billion-dollar property and amusement projects, I see the involvement of brokers," he said, pointing out it raised a question mark against their practicability.
Moreover, since capital was raised after getting the licence, the projects invariably made slow progress while also facing a high risk of failure, he said.
"The investors admit themselves they get the licence first and then mobilise the money. But in the context of the economic crisis, which investor will pour billions of dollars into a project in Viet Nam and then wait for five or 10 years for returns?"
In the first three months of this year, US investors have received licences for some large projects.
Develop
Sky Bridge Intercontinental Development Corporation will develop the Dragon Sea International Convention and Tourism Resort in Vung Tau City at a cost of more than $900 million.
Of the American investment projects licensed in the last two years, just five involve an investment of $12.13 billion.
Galileo Investment Group got a licence for developing the Creative City project in central Phu Yen Province last October.
The city is planned as a new financial, technological, educational, and recreational hub for Viet Nam and Southeast Asia.
Its 1,100-ha first phase alone requires an investment of $1.68 billion.
The second phase, expected to be licensed soon, will cover 5,600ha and cost at least $11.4 billion when completed in 2025.
The central province of Quang Nam issued a licence last October to Tanoi Capital LLC and Global C&D Inc to build an eco-tourism zone in Dien Banø District. The $4 billion Dragon Beach complex, to be built at an estimated $10 billion, caused a tumult in public opinion.
Another interesting phenomenon has been that all the giant projects involve unknown companies rather than established US names. Apart from Intel, only a few other big names have, in fact, invested in Viet Nam.
P&G began operating here in 1996, making a range of products, while Colgate Palmolive was only making toothpaste and shampoo until the end of last year when it built a $40 million plant to make toothbrush.
GE opened a representative office in Viet Nam in 1993 and upgraded into a full company 10 years later when it was still mainly offering maintenance services for medical devices and machinery.
In 2008 the company invested $61 million to build a factory in Hai Phong to produce and fit components for electricity-generation equipment.
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