The Vietnamese government sets to promote the growth of foreign direct investment (FDI) firms, considering it an important driver to deal with the country’s economic slowdown.

LG Innotek project was licensed to raise investment capital by US$500 million

The Ministry of Planning and Investment (MPI) had estimated the country’s GDP will expand by 6.58 percent in the first quarter of this year. The rate is even below the level of the worst growth scenario of 6.6 percent predicted by the ministry in November last year.

Vu Dai Thang, MPI deputy director, attributed the result to a slowdown in growth of the country’s industrial production and exports, especially of FDI firms.

MPI data showed export value of FDI firms (excluding crude oil) in the first two months of the year reached nearly US$25 billion, rising by only 1.7 percent year-on-year and accounting for 69.1 percent and of the country’s total export revenue, much lower compared with the rates of 27.2 percent and 70.8 percent in the same period of last year.

According to the MPI, the export growth of FDI firms was even lower than the 4.2 percent of average export expansion of the whole country.

The move is contradictory to the previous years, when the export value’s proportion of FDI firms often increased gradually over the years and its rising rate was at least equal to that of the entire nation.

Experts attributed the slowdown to a decline in Samsung's exports. In the first two months of the year, exports of mobile phones and its parts decreased by 7.6 percent and 5.3 percent, respectively.

Disbursement on focus

To meet the country’s GDP target of 6.8 percent in 2019, the government has recently required the MPI to map out measures, including those related to FDI firms, to promote economic growth.

Despite still putting high hope on implemented FDI projects, Thang said his ministry will also take measures to speed up the disbursement of FDI projects, which were either licensed or approved to increase investment capital last year, so as to enable it to rapidly contribute to the nation’s economic growth.

The MPI mentions some of the projects, such as US$500 million by LG Innotek, US$500 million by LG Display, US$312 million by Roboteck, US$141.63 million by Texhong Ngan Ha and US$1.2 billion by LPG Hyosung.

According to Thang, the measures are necessary as the disbursement of FDI capital was modest compared with the country’s total amount of foreign investment capital. MPI data showed foreign investment capital in Vietnam surged by 2.5 times year-on-year to US$8.47 billion in the first two months of the year, but the surge was mainly thanks to a rise of indirect investment while the disbursement of the capital inched up by only 5.7 percent to US$4.1 billion.

Besides the above mentioned projects, MPI will also focus on large-sized FDI projects, which are either conducting procedures to increase investment capital or under negotiation to get licenses.

Besides FDI firms, MPI said, to achieve the economic growth rate set for this year, ministries, sectors and localities must make their utmost efforts and take advantage of every opportunity in the country and abroad.

According to PMI, institutional improvements, economic restructuring and transformation of the growth model have led to a strong transition, but challenges remain as the country’s economy integrated more deeply into the international arena.

“New free trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the upcoming EU-Vietnam Free Trade Agreement demanded higher requirements and the full implementation of international commitments,” MPI noted, adding meanwhile, the country’s support industry development was not yet commensurate with the requirements to deeply participate in the global production network and value chain.

Hanoitimes