3:26:42 PM | 7/8/2005
The US has now become one of the largest foreign investors in Vietnam, according to the Star Vietnam Project’s latest report on the impacts of the Vietnam–US Bilateral Trade Agreement (BTA) on foreign direct investment (FDI) in Vietnam.
The report says that the actual investment capital that US investors invested in Vietnam in the period between 1988 and 2004 is double the figure of USUS$1.3 billion provided by the Ministry of Planning & Investment.
According to the STAR Vietnam Project, which is designed to support the implementation of BTA and the WTO accession of Vietnam, the ministry’s figure is based only on the number of investment projects directly invested by US-based companies. The report suggests that the investment from foreign subsidiaries of US groups should also be regarded as US investment.
Under the project’s calculation method, US investors invested USUS$2.6 billion in Vietnam in the 1988-2004 period. US investment in Vietnam has grown strongly since the BTA took effect, with an annual growth of 27 per cent in the 2000-04 period. With total realized capital of USUS$531 million, the US was the largest foreign investor in Vietnam in 2004.
“US groups invest in Vietnam through its subsidiaries in Asia because these subsidiaries are also subject to the preferential treatment offered by the BTA. The subsidiaries, most of which are located in Hong Kong and Singapore, are closer to Vietnam and they understand more about Vietnam’s legal system and market,” said STAR Vietnam Project director Steve Parker.
Many US groups invest in Vietnam through their companies located in a third country, such as Coca Cola and American Standard (through Singapore), Pepsi and Procter & Gamble (through the Netherlands). Most of the US projects invest in industry and construction and are located in Ho Chi Minh City, Binh Duong, Dong Nai, Hanoi and Hai Duong.
“Despite the high annual growth, US investment in Vietnam accounts for only nearly 1 per cent of US’s total investment in the region and is equal to 28 per cent of US investment in Thailand and 20 per cent in Indonesia in 2003,” said Steve Parker.
Steve Parker says that US investment in Vietnam will increase significantly for the years to come. High GDP growth, rapid industrialization and modernization process, huge labor force, stable political situation and the prospect to join the WTO in the near future are the key factors encouraging US investors to come to Vietnam.
The upcoming visit of Vietnam’s Prime Minister Phan Van Khai to the US will be a very important landmark in the Vietnam – US relations. This will be a chance for the two countries to boost trade and investment cooperation.
Vietnamese
