Foreign direct investment (FDI) in Ho Chi Minh City during the first seven months of 2016 has collapsed, decreasing by more than 65% when compared to last year’s same corresponding period, reports the Municipal Statistics Office.

However, it is hard to get a clear and accurate accounting from the Statistics Office due to a lack of transparency.

First, the Statistic’s Office measures FDI using the date a project is registered with the office as the measurement date and the amount of the investment after the project is completed as the value of FDI.

This is obviously an erroneous approach to measuring FDI as the true determinant is the actual expenditure or disbursement of funds on projects by foreign investors during a given period.

However, even using the Statistics Office inaccurate figures, the amount of FDI registered for the first seven months of 2016 was US$863.6 million, a fraction of the US$2.5 billion registered for the same seven-month period in 2015.

According to the Statistic’s Office, real estate remained the most attractive segment of the economy to foreign investors, tallying in at US$280 million or 43.7% of total FDI. Manufacturing stood second at US$185 million or 28.9% of the total.

For the period, the Cayman Islands was the leading source of FDI at US$231 million followed by Japan at US$96.1 million; Singapore (US$87.2 million); the Republic of Korea (US$51.2 million); British Virgin Islands (US$45 million) and Taiwan (US$30.3 million).

Le Thi Huynh Mai, deputy director of the Municipal Department of Planning and Investment, told Saigon Giai Phong (Liberated Saigon) newspaper that the FDI results did not accurately reflect a true overall picture of investment.

Her explanation was that large-scale projects are most often proposed by foreign investors in the latter half of this year, so not too much attention should be paid to the bottom dropping out of investment in the first part of the year.

So it is clear that even Mrs Mai is confused on how to properly measure FDI.

As an incentive to attract investors, the City continues to allocate more cleared land for production and upgrade infrastructure at industrial parks and export processing zones, said Mrs Mai.

The City is expanding the second phase of the Saigon Hi-Tech Park by 600 hectares and plans to expand the Quang Trung Software Park. It is also focusing on speeding up administrative reforms.

Earlier, Mai said the City considered FDI important in its development.

The City would aim to attract FDI in knowledge and technology industries, supporting industries and bio-technology to realize the goal to become a knowledge economy, achieve green growth, and improve development quality and competitiveness.

Meanwhile, Nguyen Thanh Phong, chair of the People’s Committee, candidly pointed out that unofficial payment to public officials are big part of the reason foreign investors have an unfavourable opinion of the City’s business environment and the leading cause of the decline in FDI.

He pledged to cut corruption and remove administrative red tape and other cumbersome obstacles to create a more favourable business climate conducive to the needs of foreign investors.

VOV