FDI rides high on economy

Estimates from the Ministry of Planning and Investment (MPI) put the total committed foreign direct investment (FDI) this year at $5.8 billion – a 29 per cent rise on the annual set targets. The figure includes $4 billion of newly licensed projects and $1.8 billion in increased investments.
Approximately 120 new FDI projects began operating in 2005, making total annual revenues of the foreign-invested sector, excluding crude oil enterprises, amount to $21 billion. The sector’s export value rose by 26.6 per cent to hover around $10.3 billion by the end of this year, while about 870,000 local workers are employed by the FDI sector.
MPI deputy minister Nguyen Bich Dat told participants at a recent meeting on FDI that inflows in the country were on the right track to set a record this year since the financial crisis hit the region in 1997.
However, Dat said the result, which is far below the FDI inflow of $8.8 billion Vietnam made in 1996, still did not match the country’s potential.
“Alongside the introduction of new enterprise and investment laws and with deeper integration into the global economy, Vietnam is well positioned to welcome a new drive of FDI inflows to support the national economic growth,” Dat said.
“To prepare for that, continued administration reforms, including power decentralisation and improved infrastructure network, are priorities to facilitate new foreign investors’ operations in all cities and provinces of the country,” he added.
Dat noted that governments from all cities and provinces would be given authority to issue investment licences for FDI projects, except those in special investment fields. Each FDI project is capitalised at less than $40 million.
Meanwhile, weaknesses in infrastructure are considered the biggest obstacles and need to be resolved to attract more foreign investors to set up businesses.
Nguyen Van Tien, deputy director of the Thai Nguyen Department of Planning and Investment, proposed the government mobilise different capital channels to help localities upgrade their underdeveloped infrastructure.
“Large disparities between infrastructure networks and economic growth conditions are creating unbalanced FDI inflows in different regions,” he said. “The facts have proved that some localities with substantial amounts of land do not have foreign investors, while others have limited land but receive too many foreign investors.”
Only 70 kilometres from Hanoi, Thai Nguyen failed to receive any new foreign-invested projects in 2005, despite the country experiencing an overall bright FDI picture.
Tien said the province currently accommodates 19 foreign-invested projects worth $211 million, with the largest being the $147-million Nui Phao mining venture.