Vietnam Ranks 53rd in World Investment Report 2006

Vietnam is ranked the 53rd among 144 countries in the world in term of foreign direct investment (FDI) attraction in 2005, a modest position compared to big economies in Asia like China and Singapore, according to World Investment Report 2006 released by the United Nations Conference on Trade and Development (UNCTAD) on October 17.

 

The latest ranking also reflexes Vietnam’s a three-level drop from the 46th place in 2003, 52^nd in 2004, meanwhile, Singapore stood the 6th, 7th and 5th for the past three years and Hong Kong posted the 8th, 6th and 5th during the time.

 

FDI into Vietnam increased by 25.5 per cent in 2005 against 2004, however, this is still lower than the average level of 28.8 per cent in the Southeast-Asian region and 28.9 per cent in the whole world.

 

Vietnam’s FDI last year only accounts for 7.9 per cent out of the sum pledged into Southeast-Asian nations, 0.6 per cent of total pledges for developing countries and 0.22 per cent throughout the world.

 

In 2005, Singapore topped in FDI disbursement in the region with $20 billion, followed by Indonesia with $5 billion, Thailand and Malaysian with $4 billion each, while Vietnam with just $2.02 billion though this number was already the country’s remarkable improvement from only $1.2 billion in 2000, $1.45 billion in 2003 and $1.61 billion in 2004.

 

This proved a fact that Vietnam’s implemented FDI is much lower than the registered capital, which partially explains for its unsatisfactory ranking in the UNCTAD annual study although it has been listed in the top ten Asian countries in luring FDI with a growth of 40 per cent per year.

 

Regarding the total FDI capital by late 2005, Vietnam only makes up 8.3 per cent in Asia’s figure, 1.13 per cent among developing economies and 0.3 per cent compared to the whole world.

 

However, Supachai Panitchpakdi, UNCTAD’s general secretary highly appreciated Vietnam’s great strength and potentials and emphasized that Vietnam has become a new destination of foreign investors. This can be seen a large influx of giant firms has entered Vietnam recently such as the US’s Intel Group and Taiwan’s Tycoon Worldwide Steel, he added.

 

Vietnam has singed 48 bilateral investment agreements and singed 45 double taxation avoidance agreements with partners worldwide, which will help to spur foreign investment into the country, the report noted.

 

It also suggests that there is room for improvement in Vietnam’s investment environment. Better infrastructure and telecommunications facilities, more highly skilled workers and stronger national technology policies would make Vietnam more attractive and would enable Vietnamese firms to make better use of FDI.

 

The World Investment Report 2006 is prepared by the United Nations Conference on Trade and Development (UNCTAD) and released annually since 1991. Every year, the report releases the latest statistics on FDI trend in the world. In this year’s report, China was again the largest recipient of FDI in such regions as South, East and South East Asia with its inflows increasing to US$72 million, followed by Hong Kong, Singapore, South Korea, India, Indonesia, Malaysia, Thailand, Pakistan and Vietnam.