Good Progress in FDI Disbursement: “Investors Confident of More Opportunities”

In the first quarter of this year, Vietnam saw good progress in attracting foreign direct investment (FDI), according to the Foreign Investment Agency under the Ministry of Planning and Investment.

 

According to the report, foreign investors disbursed US$1.39 billion in March, the largest amount in a single month, and totalling US$2.54 billion in the first quarter.

Positively, the amount increased each month, starting the year with US$420 million in January, US$730 million in February and US$1.39 billion in March.

 

More importantly, the disbursement of FDI capital usually means that foreign investors feel sure of business opportunities. If so, this is a positive sign in the context that domestic investment is facing hardship with the tightened policies launched by the Vietnamese Government.

 

Compared to the target of US$11.5 billion set for the whole year, the first-quarter amount equalled to approximately 22.1 percent.

 

Looking at foreign trade indicators obtained by FDI enterprises, exports and imports grew 28-31 percent in the first quarter compared with the same period of 2010. The impact of these results on the business sector is yet to be determined.

 

Export revenues were estimated at nearly US$10.5 billion in the first quarter, including crude oil, up 28.8 percent year on year, and if crude oil was excluded, the value would be US$8.9 billion, up 31.3 percent. Import turnover was approximately US$ 9.5 billion in the three-month period, up 28.4 percent.

 

The foreign-led sector enjoyed a surplus of US$969 million in the first quarter, if including crude oil. However, it saw a trade deficit of US$588 million if crude was excluded.

 

In March, foreign investors registered to invest US$814 million, a sharp drop from nearly US$1.4 billion in February. However, the decline was mainly seen in new projects.

 

According to data released by the Ministry of Planning and Investment, Vietnam licensed 80 fresh FDI projects with total registered capital of US$566 million in March, much lower than the nearly US$1.3 billion granted in February. In total, the Southeast Asian nation granted investment licences to 173 new FDI projects worth nearly US$2.04 billion, down about 40 percent in projects and 35 percent in value from the same period last year.

 

On the contrary, the amount of supplemented capital tends to increase. In March, 23 foreign-led projects registered an additional US$248 million to their registered investment capital, compared with nine projects and US$81 million in February and five projects and US$5 million in January.

 

Thus, 37 FDI projects registered to supplement US$334 million in the first quarter, down 69 percent in projects and 17 percent in value.

 

In total, Vietnam attracted US$2.37 billion of foreign investment in the first quarter of 2011, down some 23 percent year on year. Remarkably, the amount of newly registered capital was smaller than disbursed value in the three-month period.

 

Optimistic business performances or investment redirecting strategies affect foreign investment attraction. According to statistics, the manufacturing and processing sectors are the most attractive to foreign investors.

 

According to the report by the Foreign Investment Agency, these sectors attracted US$1.55 billion from 76 fresh projects and 30 existing projects in the first three months, accounting for some 65 percent of total FDI capital in the country in the reporting period.

 

The construction sector followed suit with US$206 million from 30 projects. The retail sector attracted only over US$50 million.

 

Singapore was the biggest investor in Vietnam in the January-March period with 19 projects and US$1.1 billion, followed by Hong Kong and British Virgin Islands with US$331 million and US$277 million, respectively.

 

Ho Chi Minh City, Da Nang City and Ninh Thuan Province took the lead in FDI attraction with US$1.08 billion, US$365 million and US$266 million, respectively.

 

(VNE)