FDI = Foreign Direct Investments
MPI = Ministry of Planning & Investments

FDI capital rises by 50% in 2006
17:12' 29/12/2006 (GMT+7)

VietNamNet Bridge – The Ministry of Planning and Investment (MPI) has announced the official statistics on foreign direct investment (FDI) in 2006, which shows the 50% increase in FDI capital over last year. The year 2006 has witnessed a record number of FDI projects and registered capital. Foreign investors have registered to inject $10.021 billion in projects in Vietnam, an increase of 49.1% over last year.

There have been 833 newly licenced projects valued at $7.839bil, while operational projects have been approved to raise their investment capital by $2.632bil. The disbursed capital has reached $4.1bil, up by 18.7% over last year. New projects have the average investment capital of $9.4mil, higher than last year’s level of $4.6 per project.

Ba Ria – Vung Tau is leading all provinces in terms of attracting foreign investment. Foreign investors have registered to inject $1.69bil in projects in the southern province, accounting for 22.39% of the total investment capital. The steel project by Posco alone has the investment capital of $1.12bil.

HCM City is following Ba Ria – Vung Tau in attracting FDI with the registered capital of $1.3bil. The northern province of Hà Tây, which ranked 34th last year in attracting FDI, now replaces Binh Duong to rank 3rd with 17 licenced projects valued at $805mil. Binh Duong province ranks 4th and Quang Ngai, 5th.

The Republic of Korea (ROK) proves to be the biggest foreign investor among 450 nations and territories in Vietnam, accounting for 31.9% of newly registered capital, followed by Hong Kong (15%). Japan is the third biggest investor with 10.3%, and the US the fourth with 9.5%.

Many newly licensed projects are in industries, namely Posco’s steel mill ($1.126bil), Intel products Vietnam ($1bil), Tycoons Worldwide Steel ($556mil), or THT Development Company ($314mil).

A lot of operational projects have been approved to raise production and business scopes, namely Ching Luh Vietnam Paper Company ($98mil) and Canon Vietnam ($70mil).

As such, there are 6,813 valid FDI projects with the total investment capital of $60bil.

According to MPI, investment capital is flowing to developing countries, especially the newly emerging countries with high growth rates like Vietnam. Meanwhile, big international groups are now following a strategy, under which they set up production bases in many places instead of focusing on China in order to disperse risks. In fact, Japanese investors are following the model “China +1”, and in many cases, the model means “China + Vietnam”.

However, there is fierce competition among nations in attracting FDI. India and China are considered the most attractive places for making investment, and Vietnam will have to compete with the two countries to lure FDI.

Vietnam hopes to attract $10bil worth of FDI in 2007, an increase of 2.2% compared to 2006.

Phan Huu Thang, Head of the Foreign Investment Agency under MPI, said that he was optimistic about FDI attraction in the time to come.

“Foreign investment capital is waiting right outside the door, and the capital will flow into Vietnam if we have suitable policies to attract it,” Mr Thang said.

The Government is considering big projects that foreign investors have applied to initiate, namely the iron ore exploitation project in Ha Tinh ($2bil), Dak Nong bauxite ore exploitation ($1.6bil), and Van Phong Economic Zone in Khanh Hoa Province ($1.5bil). Other projects include Nghi Son oil refinery ($2.9bil), Nhon Hoi oil refinery in Binh Dinh ($1.5bil), Mong Duong power plant in Tuyen Quang ($1.2bil), Posco ($1bil). Foreign investors are also eyeing big projects on Phu Quoc island and real estate projects in big cities and provinces.

(Source: VietNamNet, Tien phong)

http://english.vietnamnet.vn/biz/2006/12/648887/

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'India miles behind China in FDI inflow'
Saibal Dasgupta
[ 17 Sep, 2006 2341hrs ISTTIMES NEWS NETWORK ]

BEIJING: India will be nowhere near overtaking China in the race to attract FDI by 2010. Rising labour costs and growing international competition from countries like India would not affect its lead position as the most effective magnet for attractive FDI in the developing world, Chinese officials said.

They cited a study released on Thursday that projected capabilities of India and China to attract FDI in 2010. India will attract $14.3 billion while China will suck in a much larger $80 billion in that year, according to a study "World Investment Prospects to 2010: Boom or Backlash,"by the Economist Intelligence Unit and Columbia University's Program on International Investment.

"Rising labour costs and international competition will not affect its position as the biggest recipient of foreign direct investment among developing countries,"Kong Linglong, a senior official of the National Development and Reform Commission, told reporters in Beijing.

The Chinese government has indicated that it will abolish the huge tax advantage available to foreign investments, which pay 15 per cent tax as compared to 33 per cent foreign investors.

But government researchers said that this move would not affect China's prime position is the highest aggregator of FDI in the developing world. Labour costs in China rose 14.1% last year, government researchers said.

Local governments in most Chinese cities including that have attracted foreign capital are in the process of raising the minimum labour wages as the cities develop and aspirations of the people increase.

http://timesofindia.indiatimes.com/articleshow/2007091.cms

Not so good for me if they're investing en masse South West of Hanoi... in Hà Tây - Chùa Hương which is one of the most beautiful places in Vietnam... Remember that thread "Where would you like to settle down in Vietnam?"

That's where I would like to settle down! I hope they will not spoil the landscape

Brilliant news, can't for more in 2007

It's an anomalous growth spurt. $10B expected for 2007? Highly unlikely. We'll see.

The spurt in investments that took place in the last three months of 2006 was probably a gut reaction to Vietnam's enhanced propects as an effective trade partner, as a result of the WTO's accepptance of Vietnam's application for membership. Overall, FDI's are a useful barmeter of the investment community's confidence in doing business with Vietnam - No confidence, NO FDI, no business, no nothing. To be sure, the government of Vietnam does need to take critical issues of governance head on and be successful at it. In addition, the government needs to spend on social infrastructure, e.g. educaton and a more extensive economic safety net. The government also needs to spend on physical infrastrure (sewage system, waste dump design) so that we literally don't die in our own $hit. If Vietnam is pereceived to be dealing successfully with these issues, FDI can only go up.

Vietnam needs US$20 billion ODA from now to 2010

VNECONOMY updated: 04/01/2007

Prime Minister Nguyen Tan Dung has signed decision 290 approving the plan on attracting and using ODA (official development assistance) capital in the 2006-2010 periods, under which Vietnam will need US$19-21 billion worth of capital from donors.

In order to implement the socio-economic goals in 2006-2010 and reach the annual growth rate of 7.5-8% per annum in the period, Vietnam will need to mobilise VND2,200 billion (US$140 billion, 2005’s exchange rate and US$160bil, current exchange rate). Of this capital amount, 65% will be raised from domestic sources and 35% from outside sources.

Regarding the demand for ODA in the next five years, Vietnam will need US$11bil in capital for key development projects, and in order to have this amount, the committed capital must be US$19-21 billion.

According to the Ministry of Planning and Investment (MPI), Vietnam has favourable conditions to attract ODA capital. However, the ministry said that Vietnam would have to compete with other countries in attracting ODA as the demand for ODA in developing countries was increasingly high.

MPI has forecast that the total ODA capital to be committed in 2006-2010 will be US$20.4-23.7 billion. Donors have also given similar figures in their forecasts.

ODA capital is expected to be injected mostly in transport projects, post and telecommunications, water drainage and supply, health care, education, environment and science and technology. Meanwhile, ODA capital to be pumped into industries and energy will see the decrease of 15%.

Vietnam is striving to attract ODA to several fields, including the north-south highway, transport routes in the northern mountainous areas, the Central Highlands and Cuu Long River Delta.

The projects on building T2 International Airport in Hanoi, Long Thanh airport in Bien Hoa City, terminals in Da Nang Airport and Cam Ranh (Khanh Hoa) will also use ODA capital.

For 2001-2005, the donors have pledged to give Vietnam US$14.9 billion in ODA, 80% of which will be in preferential loans. The disbursement rate in the period was US$7.9 billion.

Source: VietnamNet

http://www.vneconomy.com.vn/eng/?param=art...=a2cf6e5e6d3195

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After 2010, Vietnam will be ranked amongst the "middle income countries" (with more than $1000 GDP/capita) and will not receive ODA any more, so let's hope a lot of rich countries will continue to support Vietnam with ODA until then!