Investors left in limbo awaiting capital plan

Nguyen Van Tu, deputy director of Hanoi’s Department of Planning and Investment, said many big foreign investors’ investment applications were on hold, while the Ministry of Construction was preparing Hanoi’s master plan to 2030 and with the vision to 2050.

Investors stand at the crossroads waiting to see Hanoi’s future direction

“Since the master plan has yet to be approved, no one can handle investors’ investment applications,” Tu said.

Being the largest economic hub in northern Vietnam, Hanoi is also one of the most attractive places for foreign direct investment (FDI) in the region.

Ministry of Planning and Investment’s Foreign Investment Agency statistics show the capital attracted 1,895 FDI projects worth $21 billion as of September 20, 2010 since Vietnam first opened its door to FDI in 1986, ranking third in the country in terms of FDI attraction.

But, Tu said FDI attraction had reduced this year. Foreign investors registered to invest in 189 new projects, capitalised at $170 million and expand investment in 10 operating projects worth $18.5 million from January to September, 2010.

The result was modest in comparison with previous years and did not reflect the attractiveness of the capital, he said. During the first nine months of last year, foreign investors registered to invest $383 million in Hanoi.

“The delay in approving Hanoi’s master plan is the main hindrance for luring new FDI projects to the capital,” Tu said.

The delay in completing the master plan not only impacted on investors seeking new investment opportunities in Hanoi, but also on existing projects.

South Korea’s Hermes & Sun Development and Construction Company (HSDC), for example, had to delay the construction of a licenced industrial park in Hanoi for this reason. Hong Sun, chief executive officer and president at HSDC, said it had seriously impacted on the firm’s business.

The government in May introduced a draft master plan to the National Assembly for seeking opinions, but it did not receive support from law-makers. The master plan has generated significant debate as many architects said the transport routes like West Lake-Ba Vi were not essential.

At a press conference last week, head of the Government Office Nguyen Xuan Phuc, did not say when the master plan would be approved despite media enquiries.