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Transnational companies believe in Vietnam’s potential
Foreign investors still consider Vietnam a safe destination for their business and have poured approximately US$64 billion into the country despite the global financial crisis.
Foreign direct investment (FDI) is one of the most positive features of Vietnam’s economy this year. There has been an increase in the number of large-scale projects and the equal distribution of FDI among areas, benefiting more disadvantaged regions. Case in point, Ha Tinh and Thanh Hoa are two poor provinces but rank fourth and fifth in terms of FDI attraction respectively.
This is attributable to the country’s political stability and advantageous geography as well as the government’s acute sense of responsibility. State agencies have exerted great efforts in tackling obstacles faced by investors to create a much better investment climate for them. The time-line for business registration and project approval has been streamlined considerably. The decentralization of investment management has created more favourable conditions for investors.
Peter Ryder, Director General of Indochina Capital, said that his company believes Asia will be the first region and Vietnam will be the first country in Asia to recover from the global slump given the rapid pace of development. That is why Indochina Capital still invests in Vietnam even while the world market is experiencing financial difficulties.
Statistics from the General Department of Vietnamese Customs show that FDI projects have played an increasingly important role in the country’s development. FDI enterprises have recorded more than US$23 billion in export revenue, a 31 percent rise from last year.
“FDI accounts for a high proportion of Vietnam’s investment and exports,” said former Deputy Prime Minister Vu Khoan.
However, he added: “What investors care about the most are the time-consuming obstacles created by policies and administrative procedures, which need to be eliminated as soon as possible. They are also concerned about power cuts and energy shortages as well as issues relating to taxes and interest rate incentives.”
In addition, the country has disbursed more than US$11 billion, an increase of over 40 percent against the same period last year, but the figure remains modest as compared with the registered capital.
Another problem with Vietnam’s FDI is imbalanced investment in different fields. FDI has been excessively pumped into real estate and golf course projects instead of education, medical care, agriculture and rural development.
Decentralized investment management has also created problems as localities compete fiercely with each other to attract FDI, and therefore, deviate from the master plans for their region. Fortunately, some localities have recognized their shortcomings and said ‘no’ to projects likely to pollute the environment.
Specific measures must be worked out to avoid overlap in foreign investment in adjacent localities and enhance their coordination for the benefit of all.
The Ministry of Planning and Investment has predicted three possibilities for FDI attraction in 2009, with total FDI ranging from US$10 billion to US$60 billion. The ministry is determined to step up FDI disbursement in 2009, considering this a key task in the new year.
“We will review and classify all existent projects and quickly remove any obstacles found there,” said Phan Huu Thang, head of the Foreign Investment Department of the Ministry.
Vietnam is expected to receive US$15-20 billion in FDI per year in the coming time. This amount is considered to ensure harmonious development and avoid “hot” growth.
VOV
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