Improving FDI Disbursement and Structure

According to the Ministry of Planning and Investment, the amount of FDI capital in the year to October 20 totalled US$12.8 billion, down 41.9 % from the same period in 2009. Vietnam licensed 759 new FDI projects worth US$11.59 billion in the reporting period, down 19.1 % in projects but up 28.8 % in value year on year. Besides, 210 projects registered to add US$1.203 billion to their registered investment capital.

 

With US$12.792 billion in total, Vietnam will hardly fill up the shortage of the full-year target of US$22-25 billion set at the start of the year.

 

Ba Ria - Vung Tau province topped 63 local cities and provinces in attracting FDI between January and October with US$2.37 billion, followed by Quang Ninh with nearly US$2.2 billion and Ho Chi Minh City with roughly US$1.8 million.

 

Previously, FDI mainly channelled into real estate, steel and cement industries. However, processing and manufacturing industries have recently become the main targets of foreign investors with US$4 billion, topping industries in FDI attraction in the first 10 months.

 

The strong recovery of production activities was attributed to the main reason for the inflow of FDI to manufacturing and processing sectors. Referring to international trade performances, FDI enterprises are showing a strong revival following a prolonged period of stagnation.

 

Electricity, gas and water distribution sector was the runner-up with US$2.9 billion in six projects licensed. The real estate sector came third with US$2.8 billion, including US$2.7 billion from fresh projects and US$132 million from existing ones.

Typical projects include the US$2.1 billion Mong Duong 2 thermal power plant invested by AES - TKV Mong Duong Power Company in Quang Nam province and the US$1 billion Kobelco Vietnam sponge iron plant in Nghe An province.

While the amount of registered capital has dwindled, the speed of disbursement accelerated. Foreign investors disbursed US$950 million of FDI capital in October, an increase of US$150 million from September, bringing the 10-month total to US$9 billion, up 7 % from the corresponding period in 2009. This was brilliant progress of Vietnam in an effort to quicken the pace of project implementation.

 

The disbursement of State-funded capital still kept pace in the first 10 months of 2010, reaching VND106.12 trillion (US$5.44 billion), equal to 82.7 % of the full-year plan. Provinces and cities managed over VND74.7 trillion, or 85.4 % of the yearly plan. Ninh Binh, Hoa Binh, Ha Tinh, Thua Thien - Hue, Hai Phong, Lam Dong and Hai Duong were amongst the biggest users of State-funded capital.

 

The interest of foreign investors also changed. Previously, biggest investors usually came from Asia but many now come from other continents.

 

The Netherlands took the lead in the list of 50 countries and territories investing in Vietnam in the reporting period with US$2.227 billion. South Korea was the runner-up with US$2.142 billion, the United States came third with US$1.924 billion, followed y Japan with US$1.603 billion.