Military Enterprises Call for Investment

Military Enterprises Call for Investment

Foreign investment in military enterprises is effective thanks to good management. The Ministry of Defence plans to continue to call for foreign investment in the coming years to 2010.

At a conference to review the international relations of the Economic Department of the Ministry of Defence on October 5, Dr Phan Huu Thang, head of the Foreign Investment Department of the Ministry of Planning and Investment, said that by September 30, 2004, Vietnam had attracted 4,923 projects with a total registered capital of US$44.6 billion, a total legal capital of US$19.8 billion, and a total realised investment capital of US$26 billion. Military enterprises alone have attracted 70 foreign invested projects with a total investment capital of US$897 million since 1998. Of these, 38 projects have terminated. The Ministry of Defence currently manages 27 foreign-invested projects, excepting five wholly foreign-owned projects which use Army land. These projects, capitalised at US$329 million, include 18 joint ventures, one business co-operation contract enterprise, three wholly foreign-owned enterprises and five other projects which are yet to be implemented. These five projects include a fertiliser production operation for the Thai Son Company, which develops infrastructure facilities; a project to build the Ho Tay international building of Toseco, which was suspended from 1997; the CMIN INTER soft drink production project of the Tecapro Company, which has terminated its operation; the Keppel Land project of Company N^o 28, which is yet to be carried out, and a telecommunication project of the Viettel Corporation, which was suspended from 1998. Total realised investment capital is put at US$404.576 million, accounting for 80 per cent of total registered capital.

In recent years, the Ministry of Defence has focused on developing high-tech projects and technologies related to the defence industry, while strengthening their existing projects, so few new projects have been developed. There were no new projects from 1998 to 2003. However, this September, the Ministry of Defence allowed the establishment of a joint venture between the Military Oil and Petrol Company and the Shell Corporation of The Netherlands. Foreign invested projects developed by military enterprises are often under good management. As a result, 14 of the 22 current projects are proving profitable. The proportion of profitable projects in 2003 stood at around 63-65 per cent, against the average 40 per cent success rate of foreign-invested ventures nationwide. Two out of eight projects suffering losses in 2003 also became profitable in the first half of this year, namely Loteco and Total Gas Can Tho. Major General Ho Sy Hau, head of the Economic Department of the Ministry of Defence, said that apart from their economic effectiveness and State budget contributions, projects in which military enterprises were partners had created jobs for about 3,000 people.   

Hau said that having learned lessons from unsuccessful projects in past years, the development of projects should now focus on three aspects as follows: The rights of the Vietnamese side of ventures should be clarified; legal capital contribution of the Vietnamese side should be increased not from only the land use right but also from other sources, including trade advantage and copyright; qualified managers must be selected who are able to meet the demands of economic integration. 

The Ministry of Defence has compiled a list of projects calling for foreign investment capital in the 2005-2010 period with ten major projects in the form of joint ventures or technology transfer models. At the same time, enterprises will develop their own projects based on the master plan of their management agencies. Furthermore, the Ministry of Defence will accelerate the implementation of national trade promotion programmes. Apart from the Ministry of Trade, the Ministry of Defence is the only ministry whose trade promotion programme has been approved by the prime minister with a subsidy of more than VND 5 billion (about US$317,258), accounting for 20 per cent of total subsidy for the whole country. This year, the prime minister has approved six programmes valued at VND 16.2 billion (about US$1.028 million), which are now being carried out.

For the international economic integration and trade promotion process, military economic management agencies will continue to review, amend and supplement their policies and mechanisms to attract more foreign investors. 

• Kim Phuong

List of projects calling for foreign investment of the Ministry of Defence (2005-2010)