FDI shows positive signs
Sai Gon Times Daily,
By QUOC HUNG - HCMC
Foreign direct investment (FDI) is getting more active in the country, with disbursements in the year to date having risen to a record high since the Asian financial and economic crisis in 1997-98.
Over the past 10 months, foreign-invested enterprises (FIEs) have disbursed US$2.37 billion, up 5.3% year-on-year and equivalent to 85% of the year’s target, says Nguyen Anh Tuan, deputy head of the Foreign Investment Department of the Ministry of Planning and Investment (MPI).
The year’s target for FDI disbursement is US$2.75 billion. Tuan says the current disbursement rate makes it possible to beat the target.
The Ministry of Planning and Investment’s 2001-2005 plan for FDI attraction puts the total capital disbursement at US$11 billion but figures show US$10.2 billion, or 91% of the total, has already been disbursed, with the southern focal economic zone (HCMC, Binh Duong, Binh Phuoc, Dong Nai, Tay Ninh, Long An and Ba Ria-Vung Tau) making up 47.8%.
Tuan says this is a good sign for the country’s investment environment. Foreign investors now see great potential for growth in the Vietnamese economy, so they are boosting investment activity to avail of business opportunities.
In recent years, Vietnam has actively improved its profile in the international arena by joining the ASEAN Free Trade Area (AFTA), proceeding with its bid for the World Trade Organization, signing a bilateral trade agreement with the U.S., striking an investment promotion and protection agreement with Japan and expanding trade ties with many countries.
The nation’s high-profile diplomatic activities, such as organizing the fifth Asia-Europe Meeting in Hanoi, have also paid off, with the foreign business community placing greater confidence in the local economy.
All these positive factors have prompted foreign investors to pour more capital in the country through new and existing projects.
Strong rise in extra capital pledges
January-October saw fresh FDI approvals amounting to US$3.23 billion and nearly half of it came from 388 operational projects. The extra capital commitments leapt by 66.9% year-on-year. Tuan says this shows that investors are more confident and are ready to expand operations.
There were five projects pledging extra capital of more than US$50 million each. For instance, Chinfon Haiphong Cement increased its capital by US$161.7 million, Sun Steel (Sunsco) by US$147 million, Canon by US$100 million and SaigoMax by US$100 million.
Up to 65.2% of the extra capital pledged in the period went to Binh Duong, HCMC and Dong Nai.
According to the Ministry of Planning and Investment, most of the FIEs with additional capital pledges have commenced work on their projects. Taiwanese-owned Sunsco in Binh Duong is an example; since the enterprise was licensed eight years ago, it has disbursed about US$70 million to build facilities for steel and galvanized pipe production, power generation, steel rolling, galvanized roofing sheet making and steel cold rolling. With an extra capital pledge of US$147 million approved in May, the company has started work on a factory in Dong Nai to produce steel ingots, of which domestic supply now meets less than 30%.
Since the introduction of the Law on Foreign Investment 17 years ago, 5,995 FDI projects have been licensed into the country with total pledged capital of US$56.9 billion, but only 4,965 projects worth US$44.76 billion are now operational. Of the total FDI capital, the southern focal economic zone accounts for 56.1%.
