Trade pitch to northern neighbour

Senior leaders from Vietnam’s Ministry of Planning and Investment (MPI) and China’s Ministry of Commerce last week agreed that the two ministries needed strengthen cooperation and set up an information channel to encourage southwards investment.

China’s Minister of Commerce Chen Deming said Chinese companies’ outbound investments had increased in recent years.

“How do we encourage Chinese investment in Vietnam? Firstly, I think we must provide Chinese companies with more information on Vietnam’s socio-economic development, helping them understand investment policies in Vietnam,” said Deming.

Though China is Vietnam’s biggest trade partner, direct investment from this economic powerhouse in Vietnam is still modest. Till July 20, 2010, mainland companies registered to invest in 733 projects in Vietnam, capitalised at $3.17 billion, much lower than 2,570 projects of South Korea and 1,244 projects of Japan.

Vietnam’s MPI Minister Vo Hong Phuc agreed that the lack of information about  Vietnam’s economy hampered Chinese investors to Vietnam. “We are aware that Chinese investors have not not been provided sufficient information about our investment policies.

In the future, we will strengthen cooperation with China’s Ministry of Commerce to improve this situation,” he said.

Among the largest investment projects that mainland Chinese investors are pursuing, the Vinh Tan 1 coal-fired power plant in southern central province Binh Thuan has received support from both governments.

The $1.9 billion project, invested by China Southern Power Grid Company and Vietnam’s state-owned Vinacomin, is now at the last stage of negotiations for a power purchase agreement and build-operate-transfer (BOT) contract.

Deming said the Chinese companies could invest into more big projects, like Vinh Tan 1, in Vietnam. The investments would be supported with strong government foreign currency reserves, which stand at about $2.5 trillion.

“Increased outbound investment is appropriate to our policy. But, outbound investment in Vietnam is not proportionate to the close relation between the two countries,” said Deming.

Till the end last year, he said Chinese companies’ outbound investment reached $100 billion, with investment in Vietnam accounting for just 3 per cent.