Flood of billion dollar projects

Construction and property projects are proving a magnet to big investors

Ministry of Planning and Investment’s Foreign Investment Agency (FIA) figures indicate that eight foreign direct investment (FDI) projects, whose registered investment capital range between $1.2 billion and $7.9 billion, received launch permission between January and July this year.

The combined registered capital of those projects totalled over $30 billion, or three-fourths of the nation’s newly-pledged FDI funds for the first seven months of the year. Of Vietnam’s eight biggest FDI projects, one involves steel production, another oil refinery and the remaining construction and property.

Last year, among Vietnam’s $21.3 billion newly-pledged FDI projects, only one had registered investment capital that exceeded $1 billion, the $1.7 billion Vung Ro oil refinery in Phu Yen province. Korean steel giant Posco recently submitted an investment application to build a $7 billion steel making and power complex in central Khanh Hoa’s Van Phong Economic Zone.

The central Phu Yen province is allotting land for Singapore SP Chemicals’s $5 billion petrochemical complex, which is undergoing a feasibility study. Meanwhile, Thailand’s Siam Cement is working on a $3.7 billion petrochemical complex in partnership with state-run PetroVietnam in southern Ba Ria-Vung Tau province and Malaysia’s Gamuda is working on the $2 billion Yen So recreational park and urban town in Hanoi.

“Big FDI projects are, of course, good to see, and help build up the kind of quarterly and annual aggregate FDI inflow statistics that governments typically like to display, as proof positive that their country is attractive to ‘big ticket’ investors,” said a foreign investment advisor.

The advisor said that it would be much more important if all of the large licenced FDI projects could be realised.
“Local governments have done a good job of attracting potential investors, but now the critical test is whether they can satisfy investor requirements to keep them here,” said Phan Huu Thang, the FIA general director.
Thang admitted that labour shortages were the biggest problem in getting such projects off the ground.
Formosa and Sunsco’s steel refinery and port complex, for example, which came under construction early this month, will need 100,000 skilled workers once fully operational.

Meanwhile, Thu Thiem software park expects to need a similar number of skilled labourers. FIA has asked local governments to regularly report on the progress of these FDI projects. And in cases where problems arise, FIA experts and local governments will jointly suggest solutions.