OUTSTANDING FEATURES OF FOREIGN DIRECT INVESTMENTS IN VIETNAM
I. Increase in FDI attraction:
In the past 11 months of 2007, Vietnam attracted an FDI amount of US$ 15 billion. The newly registered capital including supplemented capital reached US$ 15.03 billion, increasing 38.4% year- on -year and passing 15% of the projected target earlier this year.
The quality of new projects have been enhanced, which is reflected in the sectoral structure with 62% of the total projects and 56.4% of the total capitals pouring into the industrial sector, while 33% of the projects and 42.2% of the total capitals pouring into the service sector, which should be developed in Vietnam. Among 1283 newly licensed projects during the 11 months of the year, there have been 55 relatively large-scale projects accounting for US$9.6 billion (71.5% of the total newly registered capitals) and mostly belong to the world major corporations. Besides, there have been 51 cities and provinces attracting new projects (not including projects in oil sector), which reflects an increase of 11 units year on year.
What takes notice here is the participation of many famous corporations with huge amounts of capitals poured into the focal areas of investment attraction of all the localities.
In southern cities and provinces, Phu Yen becomes a focal point with the presence of Vung Ro Refinery Factory which costs US$1.7 billion; Ba Ria – Vung Tau becomes the host of India’s Steel factory project (US$ 527 million), Singapore’s International SeaPort project (US$267 million), SP-SPA Cai Mep Seaport Project (US$165 million) and Trung Tuong Steel Project (US$60 million); Hau Giang is the location for Lee & Man Pulp Project (US$ 349 million) and another Lee & Man paper project (US$280 million). And Long An is home for Viet – Han Golf Resort project and trade-residential complex for rent project (US$284 million)
In the northern cities provinces, many investment projects in real estate are located in Hanoi, namely Keangnam hotel and high standard apartment project (US$500 million), Charmvit five star hotel project (US$80 million). In Vinh Phuc, there are Labtop manufacturing project (US$500 million), Concrete Frame project (US$150 million) and Piaggio project (US$45 million). In Ninh Binh located He Duong cement project (US$360 million). And Ha Tay is home of Huyndai RNC Ha Tay project (US$196 million).
In the Central region, Danang is emerging with Vina Capital Trade Centre project (US$325 million) and Da Phuoc new residential project (US$250 million) while Thua Thien – Hue is home of Laguna high-end resort (plus US$ 276 million).
Notably, in Ho Chi Minh city, there appear more real estate projects, namely Yon Woon – Van Phuc Company Project (US$250 million), GS Nha Be Company Project (US$189 million), Dai Quang real estate project (US$160 million), Pine & Dai Tu project (US$150 million), Estalla joint project (US$106 million) and Vietnam – Korea house development project (US$79 million).
Among 53 countries and territories having newly licensed projects, Korea still ranks first (accounting for 28% of registered capital), followed by British Virgin Islands (26%), Singapore (12%), Taiwan (9%), Japan (6%). However, in terms of capital increase, Japan is a leading investor holding 19.25% of supplemented capital, followed by Taiwan (19.23%), Korea (15.08%) and Hongkong (11%).
The past 11 months have witnessed the strong growth in manufacturing and business of FDI enterprises. The total implemented investment capital of these enterprises reach plus US$ 4 billion (95.3% of the year plan), increasing 14% year on year. The total revenue of all the FDI enterprises, not including oil ones, was estimated to stand at US$35 billion (increasing 28.6% year on year) including US$ 17.78 billion of exported merchandise (increasing 36.5% year on year).
II. Vietnam is an attractive investment destination in upcoming years
According to the World Investment Report 2007 published by the United Nations Convention on Trade and Development (UNCTAD), there is 11% of transnational corporations confirmed that Vietnam would be their most attractive destination in upcoming years and Vietnam is among the top 10 economies of most attractiveness for investments from transnational corporations in the period 2007-2009. The reports says Vietnam ranks 6th among 141 economies which have been surveyed on investment attraction prospect, following China (52%), India (41%), the US (36%), Russia (22%) and Brazil (12%).
Notably, the attractiveness of Vietnam investment environment not only lies in the manufacturing sector, but also in the service, banking and finance sectors. This proves the strong move of an economy of multiple development towards the market principles. Especially, Vietnam’s financial market has achieved development breakthroughs in the recent years with the presence of many new financial institutions and an annual average market growth rate of tens percent.
According to the survey by Asia Business Council, Vietnam ranks 3rd in the world for investment attraction to Asian corporations in 2007-2009.
The report by the world’s largest business consultant firm- Pricewaterhouse Coopers - published in July 2007 puts Vietnam first among 20 emerging economies in terms of investment attractiveness in the manufacturing sector.
According to World Bank Business Environment Report published late September 2007, Vietnam ranks 91st for the ease of doing business, which rose 13 ranks year on year.
The FDI is expected to reach 16 billion USD for the whole year of 2007.
III.The government focuses on carrying out measures to attract FDI and enhance the efficiency of FDI implementation in Vietnam.
Together with the completion of legal environment and simplification of administrative procedures to raise the attractiveness of Vietnam’s investment environment, in the time coming, the Government focuses on realizing certain measures as follows:
To establish an investment promotion section overseas
To increase the effectiveness of foreign investment attraction, Ministry of Planning and Investment and Ministry of Foreign Affairs have on worked on defining criteria for officers and operation forms of the foreign investment promotion section. As scheduled, in this year, a number of investment units will be set up in Japan, the Republic of Korea, Singapore, San Francisco (the United States) and the Middle East.
To improve the infrastructrue
The Government continues to mobilize all national and international resources, including promulgation of regulation on encouraging privates to invest in upgradation of transporation works, seaports and telecommunication services; and in supply of water and electricity so as to avoid lack of electricity for manufacturing and business activities.
Human resources training
In the time coming, the Vietnamese government is to concentrate on investing in high quality human resources training, particularly in vocational training in order to meet the increasing demand of foreign investors. The government will call for support and coordination from international organizations to open traning courses in foreign investment promotion and management; and will cooperate with local and foreign organizations to open hi-tech vocational training centres. Since 2006, it has been a new period of foreign investment attraction with an increasing demand for high quality human resources.
The world's largest semiconductor company – Intel Corporation- invested US$1 billion in Vietnam and needs 3000 workers comprising 1000 engineers of electronics, IT and automation. Grenasa Corporation of Japan, one of the world’s leading chip design and production company, built its design centre in Vietnam in 2007. The centre needs about 1,000 engineers to design semi-conducting facilities. Meanwhile, HongHai Corp (Foxconn) of Taiwan began its investment in Vietnam. This is Taiwan’s largest hi-tech corporation with its account value on the stock market of US$ 70 billion, specializing in manufacturing products for mobile phones, computers, and telecom service. It is expected that this corporation would invest US$ 5 billion into Vietnam next year and use more than 50,000 workers.
The three foreign investors in electronics, IT and telecommunication from the US, Japan and Taiwan with total investment of over 6 billion USD and accelerated implementation of their projects in 2006-2007 are considered as a start-up for a new investment wave into Vietnam in 10-20 year - investment in hi-tech based production and exportation.
(Source: SaiGon Economic Times 1/11/2007; Bank Times số 127, 23/10/2007, SGGP 31/10/2007, Vietnam Economic Times 26/10/2007, Tiền phong 18/10/2007, VNA 20/8/2007, Report on FDI in Oct and first 10 months 2007 – MPI, VIR 28/11/2007, Báo Đầu tư 30/11/2007, website Bộ Kế hoạch và Đầu tư: www.mpi.gov.vn)