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MPI confesses that Vietnam FDI disbursements are probably overstated
This year, not only has the amount of new foreign direct investment (FDI) decreased, but also disbursements for approved projects have slowed. The Ministry of Planning and Investment (MPI) is working with provinces to speed things up.
Nguyen Thi Bich Van is a deputy director of the Foreign Investment Agency (FIA, a unit of the Ministry of Planning and Investment). Interviewed by Tuoi Tre, she explained that “in the last two or three years, many huge investment projects have been licensed by local authorities, including some capitalized at over one billion dollar. Now we are checking up on these. They have promised total investment capital of $70 billion. That will be a big capital source if disbursements go smoothly. Good implementation of the projects will polish the image of Vietnam’s investment environment.
“We’re concerned that many big projects have been slow to disburse recently. In some cases, no capital has moved at all. Local authorities realize the problem and they will decide if these projects can be implemented or it is necessary to take more drastic measures, like revoking investment licenses.
“Speeding up FDI disbursements will be the top priority task for this period. It used to be that when we promoted investment, we just tried to attract as many projects as possible. But now we pay attention to the effects of the projects. “Investment promotion” nowadays includes taking care of investors, helping them implement projects on schedule in accordance with their commitments.”
Tuoi tre: MPI has reported that $8.4 billion in FDI has been disbursed so far this year, but some people say the number’s exaggerated. Is that possible?
Nguyen Thi Bich Van: We are still striving to get accurate figures. Localities that have many FDI projects, like HCM City, Binh Duong and Ba Ria-Vung Tau, have fallen behind in their verification. They send us estimates, but the estimates prove regularly to be higher than the actual figures.
Local authorities must collect data and information from investors. Project developers must report how much capital they have poured into the projects, the equipment they have brought to Vietnam to serve the projects and so forth.
We have sent reporting forms to local authorities, but they have not sent back reports in accordance with the forms. Therefore, the figures we’ve announced about the disbursement rate are problematic.
Tuoi tre: What are the main reasons for the slowness of capital disbursements?
Van: There is an objective reason – the global financial crisis. Many investors faced difficulties because financing sources in foreign countries also met difficulties. Therefore, it was difficult for them to make disbursements as planned. However, in quite a few other cases, investors have been slow in implementing projects not because they lack capital but because they do not have the technical capability to develop projects.
Management agencies need to find out where the problem is for each project. If investors are not capable of developing projects as promised, we’ll find a way to deal with that. It is not difficult to find investment capital now if projects are feasible. We will either help the investors find other partners, or in extreme cases, we will revoke licenses to make way for more capable investors.
The investors meeting difficulties in implementing big projects all ask for permission to delay them. We need to find out if the investors really have difficulties and if they really want to settle the difficulties, or if they are simply stalling while trying to transfer projects to other investors. We should give more opportunities to investors to help them implement projects, but we will not allow them to delay the implementation of the projects for a indefinite time.
Terminating a project is an unwanted and very costly thing. Local authorities prefer to transfer the right to implement projects to other investors, rather than liquidate them. However, we will take drastic measures if necessary. If we do not, we will lose opportunities to develop local economies, and often block other investors from exploiting these opportunities. Many Vietnamese companies have the capacity to implement big projects, but the most suitable land has often been allocated to foreign investors.
Tuoi tre: In the past, we saw big investment projects in the real estate or petrochemical sectors. Now we see many small projects in the services or goods handling sector instead of manufacturing projects. Is there is an imbalance in the FDI structure?
Van: I cannot see an imbalance. We’ve been able this year to attract foreign investment in big projects, such as the power plant at Mong Duong (Quang Ninh) and the steel project in Nghe An province.
It is true that in the south, investors have shifted to focus on the service and distribution sectors rather than on manufacturing. That’s driven by the market. Previously manufacturing projects developed in large numbers in the south. However, we also need investment in the service sector. We need to encourage service providers who can bring Vietnam high added value.
vietnamnet, Tuoi tre
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