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Foreign investment target in reach
Phan Huu Thang, head of the Ministry of Planning and Investment’s Foreign Investment Agency, spoke to Hai Quan (Customs) newspaper about the country’s ability to attract foreign direct investment.
According to a recent report, the country attracted much less FDI in the first half of the year, compared to last year. What is your opinion?
Looking through figures for the first six months of this year, there have not been any impressive projects or figures in terms of attracting FDI, especially in comparison to 2008. However, this should be put into the context of the world economic slowdown. Viet Nam’s economic targets, including FDI ones, have been all adjusted. FDI in the first six months of the year, while the economy is dealing with the recession, is adequate.
Disbursement of capital needs to be looked at when evaluating FDI. Although FDI capital is lower than the same time last year, the disbursement rate is not bad. As much as US$4 billion of FDI capital has been disbursed, 81 per cent of the amount disbursed in the first six months of 2008, and 45 per cent of this year’s registered capital.
What are the shortcomings of recent foreign investment activities?
Investment gone up in some main sectors. The service and hospitality sector has attracted $4.48 billion, accounting for 50 per cent of the total registered capital.
In addition, projects have been unequally distributed in localities. As much as $6.46 billion of the $8.87 billion has been invested in Ba Ria-Vung Tau province, HCM City, Da Nang and Ha Noi also rank among the top localities for attracting FDI.
In addition to the economic downturn, FDI capital flowing into Viet Nam is being adjusted. What do you think about the adjustment?
Overall, Viet Nam cannot sufficiently absorb FDI capital due to the limitations of the country’s economy. In fact, we can only absorb approximately $8-10 billion of FDI capital every year. The rate can increase annually by only 10 per cent. Some adjustments aren’t sustainable, which should be avoided in the last half of 2009.
We have attracted $8.87 billion in FDI capital so far this year. Do you think we can reach the year’s goal of attracting $20 billion?
Investment activities during the last six months of the year, when enterprises promote capital disbursement, are usually better than the first half. I strongly believe that we can reach that goal. There are a series of potential projects being negotiated and all might be licensed by the end of 2009 or beginning of 2010.
There are currently 187 projects, with a total registered capital of $85.4 billion, waiting to be licensed. The biggest project among these accounts for $6 billion on its own. Although not all projects will be approved, they indicate our ability to attract $20 billion of FDI capital this year.
What are the challenges for capital disbursement?
Slow land clearance, which leads to delayed land distribution to investors. Land clearance management boards are sometimes stuck due to sectors’ incomplete planning.
In addition, complicated administrative formalities also cause difficulties for capital disbursement. We have not even decided whether project ratification or environmental examination should be implemented first.
Some projects have already been approved, but are still pending as the investors are not really ready.
Furthermore, infrastructure has not met investor demand.
Does the Foreign Investment Agency have any solutions to promote capital disbursement?
We will have solutions to handle large-scale projects, which have the biggest impact on the regional economy. At present, HCM City authorities have found 50 big projects at standstill. We have met with them to try and understand their difficulties. Land from projects which are nowhere near to being implemented will be distributed to other potential projects.
However, it is not easy to withdraw projects’ licences; the procedure takes six months to a year. Therefore, we also have an exemption for some enterprises to give them more time to attract investors. But we will announce a list of projects, which have had their licences withdrawn by the end of the year.
VietNamNet, VietNamNews
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