Vietnam FDI Inflows Shifting to Service after WTO Entry

Foreign direct investment (FDI) inflows to Vietnam are switching from manufacturing sector to service one, following its integration into the World Trade Organization (WTO), the Ministry of Planning and Investment (MPI) said.

 

Registered FDI in the Vietnamese manufacturing dropped from 62.9% between 1988 and 2006 to 51.5% during 2007-2009 compared to an increase to 48.1% from 30.7% in the service sector during the same period, according to MPI.

 

Among different services, hotel and restaurant projects were the most attractive to foreign investors in 2009, representing 40.9% of the country’s total pledged FDI in 2009 against just 4.2% in 2006.

 

It was followed by management and consultant projects which accounted for 36% of the national FDI in 2009 against 15.2% in 2006, the MPI added.

 

Foreign investors are estimated to disburse $19.6 billion in foreign direct investment (FDI) in Vietnam after the country joined the WTO in 2007. The Southeast Asian country attracted $114.15 billion between 2007 and 2009, up 3.5 folds against the value of the 2001-2006 period.

 

Vietnam’s WTO accession had opened the doors for foreign investors to enter the service market, Nguyen Mai chairman of Vietnam Association for Foreign Invested Enterprises said.

 

Mai noted that Vietnam is not only a competitive place for manufacturing projects, but also a potential destination for foreign services providers.

 

Koichi Takano, vice chief of the Japan External Trade Organization in Hanoi, emphasized that Japanese investors are boosting investments in the services sector in Vietnam instead of manufacturing in the past. (VIR)