In recent years, Vietnam has consistently been a hotspot for foreign investors, especially from ASEAN countries. Vietnam also promotes its investment in other ASEAN member states. This helps Vietnam’s economy develop continuously to new heights.
ASEAN’s direct investment in Vietnam
According to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, as of end-December 2009, ASEAN member nations invested over US$16 billion in Vietnam. Singapore took the lead among ASEAN investors with 474 projects worth US$9.07 billion, ranking second among all 78 countries and territories investing in Vietnam. Following Singapore was Malaysia with 219 projects with a total registered capital of US$1.7 billion of capital, ranking 10th among all investors.
Most ASEAN countries are export-oriented economies; they rely on processing technologies and have strong capacity in capital and technology, but lack natural resources and have higher labour costs. Therefore, they are allocating labour-intensive industries to Vietnam where there is a large skilled workforce with reasonable labour costs. In addition, Vietnam has a relatively safe investment environment as it has a good security and political stability.
ASEAN’s FDI capital was mainly channelled into service, transportation, real estate, post office, hotel, tourism, banking, finance, processing, garment, food processing, culture and education. Large-scale projects with modern technologies like oil, gas, telecommunications, electronics and information technology are in the hands of investors from Europe and Japan.
ASEAN countries invested in Vietnam later, but they have made a strong leap forward. From the tentative projects of Singapore, Thailand and Indonesia in the 1990s, the capital flow really ballooned in 1995 with a total of 230 projects worth over US$3 billion in Vietnam.
Particularly, right after Vietnam joined the ASEAN Free Trade Area (AFTA) in January 1996, FDI from ASEAN countries increased rapidly to over US$7.8 billion in the middle of 1997.
Since late 2000 to date, the capital flow from ASEAN to Vietnam recovered thanks to the rebound of ASEAN-member economies. However, the financial crisis last year dragged down the capital flow from ASEAN countries into Vietnam. A few projects were licensed while ongoing projects were delayed and some projects have been postponed.
According to the Vietnam Foreign Investment Agency, Vietnam has given top priority to implementing licensed projects as scheduled in addition to attracting new ones.
Vietnamese authorities are implementing the Prime Minister’s direction on reviewing and classifying Singapore-invested projects to take specific measures to support investors to realise their commitments. At present, committed capital amounts to US$5 billion.
Regarding investment partners, the Vietnamese Ministry of Planning and Investment also advocates attracting large corporations investing in ASEAN countries to include Vietnam in their production chains.
Expanding investment into ASEAN countries
Mr Surin Pitsuwan, Secretary General of ASEAN, said: “So far, mutual investment of ASEAN countries accounts for only 18 % of foreign direct investment (FDI) flows, or US$10 billion out of a total US$60 billion, in the region in 2008. Without strengthening cross-investment in ASEAN countries, we cannot achieve full integration amongst member countries.” To ensure effective cross-investment, the region needs project links in addition to attracting investment projects by individual member states
In recent years, Vietnam has continuously expanded its investment in Laos, Cambodia and Myanmar.
In 2008 and 2009, Vietnam ranked first in investment in Laos, with 200 projects worth US$2.1 billion, mainly focusing on industry, agriculture and forestry. Some highly effective projects include Sekaman 3 hydropower plant, and rubber planting, exploitation and processing in Laos. Vietnam has invested in industry, agriculture, forestry, tourism services, hotel, finance, banking and insurance in 16 out of 17 provinces in Laos.
Vietnam’s investment in Cambodia has also constantly grown. By the end of 2009, the country invested in 63 projects worth US$900 million in its neighbour, averaging US$14.2 million per project. Cambodia is now the third largest destination of Vietnamese investors among 50 countries and territories with Vietnamese capital. Vietnamese companies have so far invested US$7 billion abroad.
FDI capital from ASEAN countries into Vietnam shrank noticeably with the global financial crisis, but Vietnamese big concerns continued expanding their investment into neighbouring countries.
Thu Hoa
Vietnamese
