VietNamNet Bridge – The unsatisfactory result of foreign direct investment (FDI) in the first quarter of 2011 is not enough to prove that the FDI is in the decline in Vietnam. However, this should be seen as an early warning about the urgency of the new measures to more effectively attract FDI in 2012.
Phan Huu Thang, former Head of the Foreign Investment Agency (FIA) of the Ministry of Planning and Investment (MPI), now is Director of the FDI Research Center under the Hanoi Economics University under the Hanoi National University, wrote on Dau tu that in general, a new stage of development always follows a decline period. This has been happening over the last 25 years, since the Foreign Investment Law, now the Investment Law, came out in December 1987. As such, the thing that needs to be done is to shorten the decline period, and push up and lengthen the development period.
According to Thang, Vietnam is now in the second decline phase, which began in 2009. The second decline phase came after the peak development period in 2005-2008.
According to MPI, the FDI registered capital in Vietnam in January 2012 was 37.3 million dollars only, just equal to 2.5 percent of that of the same period of the last year. Meanwhile, MPI hopes to attract 15-16 billion dollars worth of FDI in 2012.
A question has been raised that how long the decline period would last. The question proves to be more significant if noting that the uncertainties of the world’s economy would continue in 2012 which would certainly affect the foreign investment flow to Vietnam.
The Vietnam’s national economy needs a certain amount of investment capital in order to be able to maintain the sustainable growth for the socio-economic development. The FDI contribution in the total investment capital of the whole society must not be lower than 28 percent. This was also the average proportion of FDI in the total investment capital in the period from 2006 to 2011.
Vietnam has high opportunities to stop the decline of the FDI capital, when the foreign relations between Vietnam and big partners such as the US, Japan, and the EU have been upgraded, paving the way for the conglomerates and companies of the companies to enter Vietnam.
Japanese enterprises, after the natural calamities, have been hurriedly seeking safe places for their new investments. South Korean companies still consider Vietnam a good destination for investment. Meanwhile, the new partners in the Middle East, India and ASEAN are also seeking their opportunities in Vietnam.
To date, the political and social certainties in Vietnam have still been considered a big competitive edge in attracting FDI, if comparing with other regional countries.
However, big challenges still exist. The amount of capital which has been registered, but not disbursed yet, has reached 108 billion dollars. The measures taken in the last few years to push up the disbursement of FDI capital did not bring the desired effects. It is estimated that 13,000 projects have been going very slowly in implementation, which has caused the big waste in the land, spoiled the development programming.
FIA has reassured the public that the low FDI capital in January 2012 does not truly reflect the FDI situation.
Do Nhat Hoang, FIA’s Head said on Thoi bao Kinh te Vietnam that some investors asked to delay the investment license granting to the Year of Dragon, though the procedures finished several months ago, so that they can enjoy good luck.
Some huge projects have been licensed so far this February. These include the 575 million dollar tyre making project by Bridgestone. Besides, some more projects are going to receive licenses in some more days, including the 200 million dollar project on making healthcare equipments at VSIP Hai Phong, the 95 million dollar AEON shopping mall in Binh Duong province, and the 31 million dollar Lotte Vietnam shopping mall