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Vietnam relies on big projects when attracting FDI

(13:36:09 PM 15/11/2013)
(Tinmoitruong.vn) - The seven huge projects with the registered capital of over $1 billion made up nearly a half of the total foreign direct investment (FDI) capital registered in the last 10 months.


The total FDI capital registered in the first 10 months of the year, according to the Ministry of Planning and Investment (MPI) was $19.2 billion, an increase of 65.5 percent over the same period of the last year. The ministry believes that the total FDI capital in the whole year 2013 would exceed $20 billion.


Nguyen Mai, former Deputy Minister of Planning and Investment, now Chair of the Vietnam Foreign Invested Enterprises’ Association (VAFIE), noted that the FDI sharp increase in the last 10 months was the result of the long negotiations between foreign investors and government agencies on every big project.


According to Mai, big invested capital projects always get the special attention from the central agencies and local authorities.

Analysts also commented that it was the huge projects capitalized at over $1 billion, which have made up the big success of Vietnam in attracting FDI.


Samsung Group, for example, registered the additional investment deal worth $4.2 billion Thai Nguyen and Bac Ninh provinces. The investors of the Nghi Son petrochemical and oil refinery project have decided to increase the investment capital by $2.8 billion, while the Vinh Tan thermopower plant project is capitalized at $2 billion.


While Vietnam feels happy about the high FDI capital registered in the first 10 months of the year, some analysts have noted that it is unreasonable for Vietnam to rely on some big projects when attracting FDI.


They said the government agencies should not discuss about every project and negotiate with the projects’ investors all the time about investment incentives. Instead, they should set up constant policies applied to all investors and create a competitive investment environment in the region.


Naoki Sugiura, a senior executive of Panasonic Vietnam, said he still cannot see clearly the improvement of the Vietnamese investment environment, while the inconstant policies have put big difficulties for investors.


At the meeting between the Ministry of Planning and Investment and 50 Japanese businesses two weeks ago, investors warned that when the tariff barrier in ASEAN is removed completely by 2018, foreign investors would only make investments in the countries which offer most favorable conditions.


They would prioritize to pour capital into the countries where they can see developed supporting industries and good policies.

If considering the factors, Vietnam is now at a disadvantage in comparison with other regional countries, according to Mitsuhiko Lino, President of Toyo Drilube Company which has a factory in Ha Nam province.


The sharp rise of the FDI capital so far this year does not mean that the Vietnam’s investment environment has been improved. The foreign investors’ confidence index remains low.


EuroCham has released a report on the Vietnamese business environment in Q4, showing that the confidence index of European enterprises stays at 50 points, an increase of five points over one year ago, but 29 points lower than the highest peak gained in the first quarter of 2011.


“The investment environment has got better thanks to the stabilized inflation and monetary policies. However, the barriers relating to the policies and infrastructure still exists,” Mai maintained.