APEC economies play important roles in foreign direct investment attraction of Vietnam. Kim Phuong, reporter of the Vietnam Business Forum interviewed Mr. Phan Huu Thang, Director General of Foreign Investment Agency under the Ministry of Planning and Investment about the orientations and prospects of FDI attraction into Vietnam on the threshold of the APEC Economic Leaders Meeting.
Could you tell how the pace and size of foreign direct investment into Vietnam up to now and how it will be when Vietnam officially becomes a full member of the WTO?
By the end of October 2006, Vietnam had 6,761 effective projects with an aggregate registered capital of US$57.3 billion. The disbursed capital exceeded US$28.5 billion if we counted only effective projects or surpassed US$36 billion if we counted expired projects. In the first 10 months of 2006 alone, the country attracted US$6.48 billion of new FDI capital, representing an on-year increase of nearly 41 per cent and almost fulfilling this year’s target of attracting US$6.5 billion FDI capital.
Notably, the investment of giant firms from Japan and the United States recently increased sharply. The US is the largest foreign investor in Vietnam in the first 10 months of this year if it is included investment capital from the third countries (Intel through Hong Kong).
Many projects kicked off their projects immediately after the investment licences are delivered, such as the projects of Hoya Glass Disk, Canon, Matsushita, Brothers Industries, Honda, Pou Suny and Sing Masx Vina. In the first 10 months of this year, US$3.1 billion FDI was disbursed, up nearly 8.4 per cent compared with the same period of 2005.
Outstandingly, the FDI sector continued growing very quickly. The total revenues of the FDI sector in the first 10 months of 2006 were estimated at US$25.1 billion, up 31.5 per cent against the value of the same period last year. Of the sum, the export revenues (excluding crude oil) were US$12.4 billion, an increase of 38.7 per cent on year. The industrial production value of the FDI sector grew 19.5 per cent, higher than the national average industrial production growth of 16.5 per cent.
The WTO official membership of Vietnam means Vietnam accepts the common law of the world on its investment and trade activities. Consequently, the legal system, current regulation and administrative procedure will be adjusted to match the WTO regulations. Many barriers on investment activities will be removed and the service sector will be gradually opened for foreign investors. In spite of increasing pressures on competition, I strongly believed the WTO entry will boost up the investment flows, especially those from giant economies like Japan, the US and the EU, into Vietnam.
A large majority of foreign investors are now very concerned about Vietnam and they highly appreciate the country. Which opportunities will foreign investors will seek out in Vietnam?
Currently, Vietnam is regarded as a “top candidate” of many giant groups as it has a stable politics, profuse and skilful human resources, rich natural resources and a population of over 80 million people. The upcoming joining to the WTO and the successful host of the ASEM Summit 5 (in late 2004) and the APEC Economic Leaders Meeting (in November 2006 in Hanoi) increasingly improved the role and position of Vietnam on the international arena.
The perfection of legal system as well as investment and business policy of Vietnam has received special concerns of the international community. Especially, the Investment Law, the Enterprise Law, the Bidding Law, the Competition Law, the Intellectual Property Law and other laws effective in 2006 marked an important step in institutionalise the market-driven economy of Vietnam. The above factor together with the effort to upgrade infrastructure system and intensify corruption prevention are creating favourable conditions to raise the competitiveness of Vietnam and push up new investment waves of foreign countries into Vietnam.
For the time being, Vietnam is encouraging foreign investors to pour money into its priority fields such as the production of new materials and new energies; the production of hi-tech, bio-tech and IT products; mechanical manufacturing; the investment into agriculture, forestry and fisheries development and processing industry projects, the production of artificial and new varieties of plants and animals; the ecological environment protection; the hi-tech research, development and nurturing; the construction and development of infrastructure system; the development of education, training and health, the development of traditional industries and other fields of production and services.
How will Vietnam innovate to make the investment environment more attractive and create new waves of foreign investment into the country?
According to a report, the foreign investment capital into Vietnam will increase sharply in the coming years. In five years from 2006-2010, the newly licensed capital can exceed US$30 billion, or US$6 billion a year on average, and the disbursed foreign investment capital is estimated at US$24-25 billion, or nearly US$5 billion a year on average.
To take full advantage to create a new investment wave, the Ministry of Planning and Investment has submitted to the Government the draft Decree on Several Solutions to Boost up the “New Investment Wave” from foreign countries into Vietnam.
Regarding investment partner, Vietnam needs to continue its focuses on attracting FDI capital from trans-national corporations (TNCs) in both ways: carrying out large projects with high technologies for export and creating conditions for TNCs to build technological research, development and nurturing centres in combination with human resource training. The study for solutions to attract investment from TNCs of developed nations, first of all from Japan, the US and the EU.
As regards laws, policies and the effective implementation of the Investment Law and the Enterprise Law 2005, apart from decrees to instruct the implementation, Vietnam needs to issue more instructive documents for new laws related to investment and business activities. At the same time, it will continue effectively carrying out the Vietnam-Japan Joint Initiative in the second phase in order to further sharpen the competitiveness of the Vietnamese investment environment.
As regards administrative procedure, Vietnam needs to intensify the implementation of the one-door policy and simplify the investment procedure settlement. It should check shortcomings of its administrative procedures in all fields and all levels to shorten the investment licensing and investment licence adjustments as well as to speed up settlement of investment-related procedures such as land, import, export, seal granting and dispute settlement.
As for infrastructure structure, we need to continue focusing our efforts and resources to upgrade our infrastructure system, first of all the sufficient energy supply to investors. The country also needs to have policies to encourage private sectors to invest in developing infrastructure system, including independent power plants, transport works and seaports.
As for investment promotion, Vietnam will announce national investment portfolio for the 2006-2010 period and prepare investment documents and steps to attract investment from large firms. It will actively approach and support potential investors who want to do business in Vietnam.
How will the APEC Economic Leaders Meeting bring benefits to Vietnam in attracting foreign direct investment?
With 21 member economies, the Asia-Pacific Economic Cooperation (APEC) forum has been play an very important role in the field of foreign direct investment in Vietnam.
Currently, 16 out of 21 member economies have investment in 6,527 projects in Vietnam with a total registered capital of US$49.3 billion, accounting for 83.1 per cent of total FDI project volume and 69.2 per cent of total FDI investment value in the country. Notably, five APED economies of Japan, Singapore, South Korea, Hong Kong (China) and Chinese Taipei are always the largest foreign investors in Vietnam. They are now holding 60.6 per cent of total registered FDI capital in Vietnam.
APEC is a group of many potential investment partners for Vietnam. Two of the three largest economic hubs in the world (the US, the EU and Japan) are APEC members (the US and Japan). Other APEC member economies like Singapore, South Korea and China have high potentiality to invest in Vietnam. However, the investment capital flow from APEC economies is still unsatisfactory as the potentiality is enormous. Therefore, in the framework of the 14th APEC Summit, Vietnam will organise many dynamic activities to boost cooperative relationship of businesses among APEC member countries and increase investment capital flow from APEC economies into Vietnam.
Kim Phuong
Vietnamese
