FDI Capital Amazingly Reaches US$9 Bln in 2006

 

The disbursed capital is forecast at US$4.1 billion, 10.8 per cent higher than the initial plan. The FDI sector will possibly generate combined revenues of US$30 billion, up 36.4 per cent against last year on year, including US$15 billion from export (exclusive of crude oil), an increase of 18.7 per cent compared with last year’s value.

 

Thang said, in 2006 the position of Vietnam on the international arena is heightened, helping attract more foreign investors. In addition, the business and investment environment in Vietnam is improving to create a common legal level for both domestic and foreign investors. Moreover, the business environment is becoming transparent, easy to access and accordant with the international practices.

 

According to the estimation of the Foreign Investment Department, Vietnam will draw US$9.2 billion FDI capital in 2007, including US$7 billion from fresh projects and US$2.2 from operational ones. Many experts said the FDI attraction of Vietnam may be much higher in the following years.

 

Firstly, the fast-growing Vietnam is thirsty for capital and is generating golden opportunities for foreign investors although its development level is a bit low. The statistics recently released by the World Bank (WB) showed that although Vietnam had a population of roughly 83 million people in late 2005, ranking 13^th worldwide, its GDP (calculated on purchasing power parity) was only US$254 billion, ranking 37^th in the word, its per capita GNI was just US$620 a year, ranking 166^th out of 208 compared economies. Meanwhile, the WTO statistics showed Vietnam ranked 50^th out of 50 world largest commodity-exporting nations.

 

From another point of view, if the openness of Vietnamese economy’s export was just 47.82 per cent in 2000, it jumped to 61.14 per cent in 2005. Meanwhile, the openness of its economy’s import was raised from 51.73 per cent in 2000 to 69.69 per cent in 2005. These figures meant that the Vietnamese economy is still at a low development level but it is an export-oriented one and the export relies on growing import. In other words, the potential to open up the Vietnamese market is huge and the internal force of Vietnam is unable to realise this potential. Hence, this is a golden chance for foreign investors, not only in manufacturing commodities for export but also in developing infrastructure and input materials. With the second largest population in the Southeast Asian region, Vietnam is a prolific market for any service and consumer goods production firms.

 

On the other hand, according to a recent assessment of the United Nations Conference on Trade and Development (UNCTAD), Vietnam is listed in a group of countries with low FDI potential but with high operating efficiency of the FDI sector. This is surely a momentum to stimulate foreign investors into Vietnam to do business, especially after the country joined the world trade club, WTO.

Secondly, many experts said Vietnam has an increasing role and influence in ASEAN bloc; hence, many economic superpowers like US, Japan and others rely on it to maintain their influences in the Asian region.

 

Particularly, the second investment wave from Japan will raise the current investment capital of this country in Vietnam from US$6.5 billion to US$15 billion by 2010, according to Japanese Prime Minister. The recent movements showed that US investors are likely to begin pouring their investment capital into Vietnam.

 

Recently, Vietnam attracted a lot of large US-led projects. Specifically, Intel raised its investment capital to US$1 billion from US$605 million. AES & Power Group and Vietnam National Coal, Mineral Industries Group signed a US$1.4 billion agreement to jointly operate Mong Duong 2 Power Plant. Rockingham Group is planning to invest US$1 billion into a tourism project in Phu Quoc Island.

 

With a lot of advantages together with the entry to the WTO, the Vietnamese market has become a focus of concerns for foreign investors, who mainly come from developed nations and regions. Therefore, the possibility of soaring FDI capital pouring into Vietnam is very high. The estimated attraction of over US$9 billion foreign investment capital in 2006 and nearly US$10 billion in 2007 is a strong momentum to boost up the development of the Vietnamese economy, further uplifting the GDP growth rate target of 7.5-8 per cent in the following years.

 

The Ministry of Planning and Investment has submitted a project to set up the first foreign investment promotion division to the government for approval. It will initially focus on key areas like Japan, Germany and the US.

 

Under the project, the division will deputise the Ministry of Planning and Investment to promote investment in other countries. It will be responsible for assisting foreign investors in Vietnam and domestic investors in other countries and helping foreign investment promotion activities overseas. It will also implement missions related to ODA and bilateral and multilateral economic cooperation programmes.