FDI to be checked by Vietnamese shortcomings

According to a report released by the General Statistics Office of Vietnam’, the country has attracted $6.88 billion in registered FDI in this year’s first four months, up 85 per cent against the same period last year. Besides, disbursed FDI reached $4.7 billion, up 12 per cent on-year.

Notably, foreign investors poured $5.08 billion into 697 newly-registered projects, an increase of 55.6 per cent in the number of projects and 89.9 per cent in registered capital on-year, and added $1.8 billion to 314 existing projects.

Despite the optimistic figures in FDI in this year’s first four months, Vietnam is expected to face difficulties in attracting foreign capital later this year, due to various reasons.

According to deputy director of the Ministry of Planning and Investment’s Foreign Investment Agency Nguyen Noi, the FDI picture in this year’s first four months was quite bright, however, the whole year of 2016 will depend on large-scale projects, where licensing procedures remain unclear.

One such project is the $22 billion Victory oil refinery, invested by Thai PTT Public Company Limited (PTT) and Saudi Arabian Oil Company (Saudi Aramco) in the central province of Binh Dinh. The project’s fate remains uncertain in the face of a global slump in oil prices. As of now, the investors have yet to submit the necessary application dossiers to the local authorities for approval.

Besides, Amata Corporation, Thailand’s largest industrial developer, planned to co-operate with domestic Tuan Chau Group to construct Amata-Halong City on an area of 5,790 hectares in the northern province of Quang Ninh’s Quang Yen town, with the total capital of $1.6 billion. The construction was expected to start in early 2016, however, investors have yet to make a move to actually start the implementation.

Furthermore, a series of build-operate-transfer projects on a billion-dollar scale are waiting to be licensed.

Another difficulty is that Vietnam sees harsh competition in attracting FDI by Indonesia, Myanmar, and Malaysia, according to Nguyen Anh Duong, an economic expert at the Central Institute of Economic Management (CIEM).

According to the Japan External Trade Organisation’s survey on Japanese perceptions of the Vietnamese business climate in 2016, only 58.8 per cent of respondents said they made profit in Vietnam in 2015, down 3.5 per cent year-on-year.

Besides, Vietnam is making little progress in simplifying administrative procedures, which is another barrier to attracting FDI. For example, in the World Economic Forum rankings, Vietnam ranked 133th out of 144 nations surveyed in terms of investor protection, 106th in terms of customs procedure convenience, and 88^th in terms of intellectual property rights protection. In general, within the ASEAN, Vietnam sits above Laos, Cambodia, and Myanmar only.

According to the General Statistics Office of Vietnam’s report, in the first four months of 2016, Haiphong attracted the largest amount of FDI with an impressing figure of $1.59 billion, equalling 31.3 per cent of the country’s total. The runners-up are Hanoi with $595.5 million, Binh Duong with $329 million, and Bac Ninh with $309.3 million. Dong Nai ranks fifth with $468.9 million in FDI.

The processing and manufacturing sector remains in the lead amongst the 19 sectors attracting the largest volume of FDI, with $5.24 billion, making up 76.2 per cent of the total FDI volume arriving in the country. The science and technology sector ranks second with the total capital of $334.6 million, equalling 3.5 per cent of the total.

South Korean enterprises became the largest foreign investors, registering $2.48 billion in the registered investment capital for new projects in Vietnam in the first four months of 2016, equalling 48.8 per cent of the total. The runners-up are Singapore and Taiwan with the total capital of $502.1 million and $403.1 million, respectively.

RELATED CONTENTS:
	Gigantic Victory Nhon Hoi oil refinery downsized
	Delayed projects lose licence rights
	Update on mega foreign invested projects in Vietnam