FDI inflows to South, East, and South-East Asia achieve new high and Vietnam follows the trend but investment in infrastructure and workforce still needed.
Foreign direct investment (FDI) inflows to South, East, and South-East Asia, including Oceania, reached a new high of US$165 billion in 2005, a 19% increase over 2004, according to UNCTAD's World Investment Report 2006 ‘FDI from Developing and Transition Economies: Implications for Development.’ With continued high economic growth, the region has become more attractive to market-seeking FDI. Furthermore, it has become a hot spot for transnational corporation (TNC) investments in financial services and high technology industries.
“FDI inflows to Vietnam have followed this trend, with receipts exceeding US$2 billion in 2005. This most recent increase reflects investors’ confidence in Viet Nam’s economic future,” said UN Development Programme Deputy Resident Representative Subinay Nandy. “But the report 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 reports states that FDI in Vietnam in 2005 increased by 25.5% against 2004. The increase is lower than that of 28.8 per cent of the whole Southeast Asian region, which saw its FDI increase from US$19.9 billion to 25.7 billion, and that of 28.9 per cent of the whole world, which witnessed FDI rise from US$710.6 billion to 916.3 billion. FDI inflow of Vietnam accounted for 7.9 per cent of total FDI inflow in Southeast Asia, 0.6% per cent of FDI inflow of developing countries, and 0.22 per cent of the world’s FDI inflow in 2005.
According to the report, among 141 economies rated for FDI effectiveness on a basis of statistics of three consecutive years, Vietnam’s rank was quite high but gradually fell from 46th in 2003 to 52nd in 2004 and 53rd in 2005. Based on the norm, some economies around Vietnam had high ranks: Singapore ranked sixth, seventh and fifth; Hong Kong, eighth, sixth and third, respectively from 2003 to 2005.
China was again the largest recipient of FDI in the region as well as among all developing countries worldwide. Its inflows increased to US$72 billion. According to the report, Southeast Asia is increasingly attracting "high-quality" FDI aimed at high value-added and knowledge-intensive activities. Intel is expanding its assembly and testing facilities in China and Malaysia and plans to invest US$300 million in Viet Nam to build the country's first semiconductor factory. This proves concrete evidence.
Lan Anh
Vietnamese
