Vietnam Attracts over US$218 Billion of FDI in 25 Years

 

FDI source has played an important role in Vietnam’s economy in the past 25 years. This has become one of the most dynamic economic sectors in the country.

FDI capital has primarily flowed into infrastructure. According to the Ministry of Planning and Investment, the foreign investment into this field remained very strong although the economic growth slowed down.

 

According to the ministry, in the past 25 years, the country has 123 FDI projects with more than over VND6,000 billion (US$279 million) each, totalling US$139 billion, which equals 57 percent of total FDI capital. Among them, 63 projects have an individual investment capital of more than VND12,000 billion (US$558 million), totalling US$115.3 billion, which accounts for nearly a half of registered FDI. Most of these projects are engaged in telecommunications, electricity, petrochemical and steel. Currently, 15 thermal power plants with an individual investment capital of VND12,000 billion, conducted in BOT form, are pending for approval.

 

The ministry said Vietnam now has some 300 large-scaled industrial zones and economic zones with the presence of foreign investors. These industrial zones have drawn over 50 percent of total FDI in Vietnam. Apart from infrastructure, major corporations around the world are also interested in high-tech and processing industries.

 

With its strong determinations to create a good investment environment for foreign investors, Vietnam has received a very good response from foreign investors.

For high-tech sector, investors will enjoy preferential tax rate of 10 percent in 15 years, with zero tax in the first four years and a 50 percent reduction in the next nine years. Projects with a registered capital of over VND6,000 billion will enjoy a soft tax rate of 10 percent in 30 years.

 

The Ministry of Finance is proposing similar treatments to industrial and agricultural production projects with an individual capital of VND12,000 billion or more if they disburse the registered capital in five years.

 

A 10-percent tax rate will be imposed on projects with annual revenue of VND20,000 billion on the condition that they used modern technologies.

 

South Korea’s Samsung Group has invested US$5.5 billion into Vietnam since it made a debut in March 2008. If the electronic project in Ho Chi Minh City is approved and commenced, its investment capital in Vietnam will reach US$7 billion, becoming a top foreign investor in the Southeast Asian country. It has planned to pour additional US$3 billion to expand its production facility in Thai Nguyen province. This will lift the group’s export turnover in Vietnam to a new high.

 

Apart from huge electronic investments, Samsung also invested US$950 million to build a shipyard in Vietnam.

 

Another big foreign investor is LG Group, also from South Korea. Dang Thanh Tam, who has focused on drawing investment capital from LG, said this group is planning to build a high-tech city in Vietnam. Kinh Bac City Development Holding Corporation, led by Tam, is administering 11 industrial parks which are expected to attract US$2 billion of FDI by 2015.

 

LG Group also invested US$1.5 billion into Trang Due Industrial Park in northern Haiphong City. LG and Kinh Bac also signed a memorandum of understanding on leasing a land plot in this industrial park for VND650 billion.

 

Many industrial parks have also signed MoUs on investment projects with pledged value amounting to billions of US dollars.

 

Together with industrial infrastructure, transport infrastructure also received strong interests and investments of foreign companies.

 

According to the Ministry of Planning and Investment, Vietnam Expressway Corporation (VEC) is planning to sell five freeway projects to foreign investors as follows.

Hanoi - Lao Cai: The 245-km long route, which opened to traffic in September 2014, cost US$1.5 billion.

 

Cau Gie - Ninh Binh: The 50-km six-lane route, which opened to traffic in mid-2012, cost VND8,974 billion, invested in BOT form.

 

Ben Luc - Long Thanh Highway: The total investment capital in the first phase is US$1.6 billion, funded by Asian Development Bank’s loans and Japan’s ODA capital.

HCM City - Long Thanh - Dau Giay Highway: Started to be build in October 2009, the 55.7-km long route cost VND18,884 billion.

 

Danang - Quang Ngai Highway: The 140-km route requires a total investment of VND27,968 billion.

 

Besides, the Ministry of Transport has announced that 70 percent the 70-km Hanoi - Haiphong Highway will be sold to an Indian investor. Started in 2008, this 105-km project costs VND46,900 billion to build.