Vietnam expects foreign investment boom in 2001
HANOI - Foreign investment is surging back into Vietnam, with the
Ministry of Planning and Investment (MPI) predicting a 32 percent
increase this year.
January saw 19.9 percent year-on-year growth, with 13 foreign direct
investment (FDI) projects worth US$43.4 million. The MPI predicts
Vietnam will attract $2.5 billion in foreign investment this year.
Several large-scale FDI projects are under consideration and tipped for
licensing before year's end. They include a $500 million project to
manufacture chemical fibers; construction of the Phu My gas power
plants, worth $850 million; a $230 million mobile phone factory; and a
$120 million agro-product processing plant.
The new breed of foreign investor is opting for complete control over
their operations, with nine out of the 13 projects licensed in January fully
foreign owned.
Experts said the investment recovery began last year, with licences doled
out to 303 foreign projects valued at $1.9 billion. That growth augured
well for 2001, particularly as the strongest increase came at the end of
the year: in December alone, 15 projects worth $1.13 billion received
licenses.
The largest foreign-invested project was the $1.08 billion Nam Con Son
gas field project. The joint venture between Britain's BP, Norway's
Statoil, India's ONGC and PetroVietnam got its licence in December
and will bring ashore natural gas from 360 kilometers out to sea in 2002.
Much of the foreign capital flows into the southern provinces, particularly
Binh Duong, Ho Chi Minh City, Dong Nai and Ba Ria-Vung Tau. In
January alone, Ho Chi Minh City attracted nine foreign projects worth
$38.6 million. Foreign-invested manufacturing enterprises located in the
country's economic hub posted a 15.8 percent increase over 1999. Vice
President of Ho Chi Minh's People's Committee Nguyen Thien Nhan
attributes the growth to the government's improvement of the domestic
investment climate, singling out out recent amendments to the Foreign
Investment Law and the signing of the Vietnam-US trade agreement as
reigniting foreign interest in the country.
But Nhan said much needs to be done if January's strong start is to
translate into a return to pre-Asian financial crisis investment levels.
Administrative procedures need simplification and problems related to
service and labor quality, business fees and investment promotion
activities must be resolved, he added.
While Vietnam boasts cheap labor costs and a young workforce, it is
hampered by time-consuming administrative procedures and high service
fees that deter some foreign investors, Nhan said.
Charges for international telephone calls in Vietnam are four times higher
than in Singapore and three times higher than Thailand. Another problem
is that localities have not yet formulated effective investment promotion
programs of their own to attract investors. This has resulted in much of
the foreign funds flowing into the southern economic zones of Ho Chi
Minh and Binh Duong.
But while the investment may be concentrated in certain areas, the range
of industries attracting foreign funds and their profit potential is growing.
The motorized vehicle manufacturing and assembling industry was a
strong performer last year - with output rising 41.2 percent. The rubber
and plastic industry also turned in growth of 30.5 percent. Manufacturing
projects accounted for 214 projects. Of the $529 million invested, 51.4
percent went into light industry and 40.2 percent into heavy industry.
Most of the manufacturing projects licensed in 2000 were small-scale
operations, with the value of each project averaging about $2.47 million.
Other sectors such as services, construction and real estate have yet to
recover from the regional economic crisis.
But the cultural, educational and healthcare sectors are starting to attract
foreign investment, last year luring nine projects with total investment
capital of $67 million.
Vietnam news Agency - February 26, 2001.
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