Huge FDI influx ahead

With several large-scale FDI projects in the pipeline, this year’s dip in foreign capital will likely be reversed
Photo: Le Toan

Late last month, Korean media reported that Samsung Display - part of South Korea’s tech giant Samsung Group - planned to ship its LCD screen manufacturing production lines from its home country to either China or Vietnam.

The move came after Samsung Display decided to split its LCD and OLED business units into two separate tech divisions. Since LCD screen assembling is quite labour-intensive, Samsung Display is considering moving these manufacturing lines abroad to save costs.

In light of Samsung’s investment track record here, it appears that Vietnam is the more likely choice of the two countries in terms of cost-efficiency.

Last year, Samsung Display kicked off a $1 billion project in the northern province of Bac Ninh, which will produce high-resolution touch screens for Samsung’s smartphone plants both in Vietnam and throughout the world. This plant has been in operation since March.

Also, the Bac Ninh Provincial People’s Committee has recently entrusted the Bac Ninh Provincial Industrial Zones Management Authority to negotiate and sign an agreement for the Samsung Display expansion project. If the plan comes to fruition, a huge capital flow from Samsung Display would move to Vietnam in the foreseeable future.

Meanwhile, also late last month, authorities in the south-central coastal province of Binh Dinh held two working sessions on the deployment of a mammoth $22 billion Victory Nhon Hoi oil refinery and petrochemical complex.

The Binh Dinh Provincial People’s Committee Chairman Ho Quoc Dung revealed that they expected to wrap up the project’s investment procedures and grant the project investment certificate during this year’s second quarter.

In addition, there has been positive movement forward in the landmark Van Phong 1 thermal power plant project, to be located in the south-central costal province of Khanh Hoa. The estimated $2 billion build-operate-transfer (BOT) contract is expected to be inked in this year’s third quarter, enabling the project to attain an investment certificate before the end of this year.

In another significant foreign investment project, in March this year, two South Korean groups EUN-SAN and OUE proposed a sizable property project in Ho Chi Minh City’s District 1. Located on the Ba Son Shipyard site, this development would require an investment capital fund of $5 billion. The project is expected to break ground to coincide with Vietnam’s National Day celebrations on September 2.

The project’s fate, however, is pending prime ministerial decision. At present, Ho Chi Minh City’s management authorities are awaiting final answers from the government and the Ministry of Defence.

The list of mega foreign direct investment (FDI) projects hoping to tap into Vietnam’s potential also encompasses other BOT power projects.

This growing list of large-scale investment projects indicates that the declining on-year FDI in Vietnam recorded during the first four months of this year is more likely to be a momentary blip, as opposed to a running trend. So far this year, there has been $3.72 billion in the total committed and supplemental capital, equal to 76 per cent of the same period in 2014.

According to Dang Xuan Quang, deputy director general of the Ministry of Planning and Investment’s Foreign Investment Agency, a declining FDI figure in the first four months of this year was simply because no landmark project was licensed during the period.

“Some big projects are under negotiation. If even just one of these projects gets the green-light from the government, this could help reverse the current declining committed FDI inflows to Vietnam,” Quang said.