VietNamNet Bridge – The recovery of foreign direct investment will continue playing a critical role in bolstering Vietnam’s economic growth in 2014.

According to the Foreign Investment Agency (FIA), the total new foreign direct investment (FDI) commitment to Vietnam reached $21.6 billion in 2013, up 54.5 per cent year-on-year.

This figure, however, did not yet include the expansion of investment of the British firm Technostar at Vung Ro petrochemical and oil refinery complex in the central province of Phu Yen. The company increased its investment to $3.18 billion from $1.7 billion, which would bring the total new FDI commitment in Vietnam to $23 billion.

The FDI disbursement sum in 2013 also witnessed a strong recovery with a positive rebound of 9.9 per cent, reaching $11.5 billion, in comparison with a slide of 4.9 per cent in 2012.

“We tried to improve the investment climate in 2013 and this is our position at the yea’s end,” said FIA director Do Nhat Hoang, adding that this positive result offered a bright outlook for FDI to Vietnam in 2014.

Although Hoang refused to give a specific target in 2014, he said that expectations would be higher than in 2013. Hoang referred to many significant investment projects proposed by foreign investors that were due to enter discussions for licensing next year.

Samsung is a good example. Last October it entered a memorandum of understanding (MoU) with the MPI to co-operate on priority industries, including power, urban development, airports, chemical engineering, shipbuilding and a public information and communication technology programme.

Samsung expected that the MoU would enable the group to develop detailed plans to participate in Vung Ang 3 and Quang Trach 2 power plants in the central provinces of Ha Tinh and Quang Binh. Vietnam is promoting these as part its national power development plan.

The group also plans to invest in the Long Son oil refinery and petrochemical project in the southern province of Ba Ria-Vung Tau, and study the feasibility of investing in Long Thanh international airport in the southern province of Dong Nai.

In addition, the group will co-operate with the state-run Shipbuilding Industry Corporation (SBIC), formerly known as Vinashin, to help this shipbuilder to restructure after falling into financial trouble in 2011. It will also partner with a Vietnamese firm to study the feasibility of investing in property in Hanoi.

Presently, South Korea, Japan and Singapore are the main sources of FDI in Vietnam, but the ANZ Banking Group, in a report released early last month, forecast there would be more FDI inflows from Taiwan in the medium-term.

According to the General Statistics Office, foreign invested companies contributed 20 per cent to Vietnam’s gross domestic product (GDP) and accounted for two thirds of the nation’s export turnover in 2013.

“Many people are afraid of the economy’s dependence upon FDI firms, but I think they are part of the economy and foreign companies in Vietnam should be treated fairly,” said Nguyen Bich Lam, general director of General Statistics Office.

FDI to Vietnam hits 21.6 billion USD

Foreign investors have so far this year poured 21.6 billion USD in Vietnam, a year-on-year increase of 54.5 percent.

As many as 1,275 new projects have been licensed with a total registered capital of 14.3 billion USD, while 472 projects added 7.3 billion USD to their existing capital, a year-on-year increases of 70.5 percent and 30.8 percent, respectively.

According to the Ministry of Planning and Investment (MPI), an estimated 11.5 billion USD from the FDI projects has been disbursed in the period, up 9.9 percent over the same period last year.

The growth is attributed to efforts by the Government, ministries and localities in improving the business environment and simplifying administrative procedures to attract more foreign investors, said Do Nhat Hoang, head of the Foreign Investment Department under the MPI.

It also shows that Vietnam remains an attractive and potential destination for foreign investors.

The presence of large projects, especially those worth 1 billion USD or more contributed to the over fulfilling of the annual target in FDI attraction and disbursement in the period.

Exports from FDI enterprises also made remarkable contributions to Vietnam’s economic growth this year as their turnover reached 88.4 billion USD, up 22.4 percent against the last year’s figure.

Ha Quang Tuyen, head of the National Account System under the General Statistics Office (GSO) said production and exports of the FDI enterprises make up about 20 percent of the country’s GDP in 2013, while the figure for 1992 was only 2 percent.

This year, Vietnam is estimated to have a trade surplus of almost 900 million USD for the second consecutive year after exports were estimated at 132.2 billion USD and imports, at 131.3 billion USD.

According to a report of the MPI on Vietnam’s FDI attraction over the last 25 years, from 2003, the exports by FDI firms surpassed those by local firms and became a major factor to speed up the overall export, as it made up about 64 percent of the country’s total export turnover in 2012 and 66.87 percent in 2013.

The contribution by large FDI enterprises such Samsung, Nokia, Intel and LG is also considerable in the change of the structure of exports.

In addition, the investment poured by FDI businesses into the social development stood at the highest rate, showing that the FDI enterprises play an importance role in the national economy.

Northern Thai Nguyen Province led localities in FDI attraction this year, bringing in 3.3 billion USD, making up 16.1 percent of the total.

Central Thanh Hoa Province came in second with 2.9 billion USD, accounting for 14 percent of the total.

Northern Hai Phong City took third place with 2.6 billion USD.

Source: VIR