It is natural that Vietnam, the second largest South East Asian market, has drawn the attention of investors from China, Hong Kong, Taiwan and Macau.

 

Analysts noted that Chinese capital has been poured into a wide range of business fields.

The presence of Chinese investors is mostly evident in the power sector. The Duyen Hai 1 thermopower plant which is under construction, for example, was developed with 85 percent of total capital of $1.6 billion borrowed from China Import-Export Bank.

The $1.95 billion Mong Duong 2 thermopower plant, expected to become operational in the near future, is developed with 19 percent of the capital contributed by the Chinese investment group CIC.

According to the World Bank, China provides preferential loans to the projects in nearly all industries and energy sectors in Vietnam, through export credit loans and ODA (official development assistance). China is also the EPC (engineering, procurement, construction) contractor in power projects.

A report released by the Ministry of Industry and Trade in April 2014 showed that Chinese were the EPC contractors in 15 out of the 20 undergoing thermopower plant projects.

Chinese have also poured money into key infrastructure projects. Most recently, they have suggested building a railway connecting Can Tho City in Vietnam with Phnom Penh City in Cambodia.

Chinese money has been present everywhere in the Vietnamese real estate market. The capital flow has become even stronger recently when Vietnamese real estate developers met difficulties in the economic crisis and they had to transfer projects at low prices.

Troy Griffiths, deputy managing director of Savills Vietnam, a real estate service provider, said many Chinese investors sought to buy real estate projects in Vietnam in 2014.

In 2013, Chinese Prime Minister Li Keqiang, during a working visit to Vietnam, called for support for the development of two Chinese-invested key industrial zones in Tien Giang Province in the south and Hai Phong City in the north.

Meanwhile, Texhong Group is developing a large industrial zone, capitalized at $215 million in Quang Ninh province. These areas are likely to become new Chinese production bases in Vietnam.

In heavy industries, Chinese presence can be seen in the Formosa steel project in Ha Tinh Province and Lao Cai Steel project capitalized at $340 million. 

A series of textile and garment projects have been registered recently in anticipation of the TPP (Trans Pacific Partnership) agreement slated for 2015.

Chinese investments have brought capital to Vietnam, but also have brought challenges. 

Projects in heavy industries have caused serious environmental problems. The old machines and technologies brought to Vietnam from China are feared to turn Vietnam into a “technology dumping ground” for China. 

NCDT