Foreign investors have pumped in about $6.3 billion in capital into Vietnam in the first half of this fiscal, up 9.6 per cent from a year ago, according to data compiled by the country’s Planning and Investment Ministry. The inward investment into projects in Vietnam makes it the second most popular destination with foreign investors in the Asia pacific region, only behind China, and ahead of India, Malaysia and Indonesia.
During this period, about 750 new FDI projects worth $3.84 billion, were granted investment certificates, marking a 21% fall when compared to the corresponding period last year, the country’s Foreign Investment Agency said in a statement.
In addition, the FDI sector witnessed a trade surplus of over $6 billion.
Among the 16 market segment that attracted FDI in the first six months of this year, manufacturing led with 338 new projects and 190 capital increase projects, totaling an investment capital of $4.18 billion.
Ranking second was the real estate sector with $465.5 million, and third was wholesale and retail with $276.5 million.
Vietnam had 48 investment partners during the period. Korea retained its number one position (27.7 per cent of the total capital), Bristish Virgin Island emerged as the second largest investor with 12.5 per cent share of investment, displacing the Japanese, which usually occupy this position.
International organisations have recognised the stable GDP growth of Vietnam, which can reach 6.5 per cent this year, bolstered by growing FDI and exports.
Vietnam, along with other Southeast Asia countries, will be the world’s next factory in the next 10-15 years, as global companies want to capitalise on the region’s abundant labour resources, commented ANZ Banking Group.
The local government’s recent efforts in improving investment environment have received positive assessment from international agencies who believe that a stable macro-economy, curbed inflation and the confidence in the local currency will create a solid foundation for growth in the country, a government portal stated.
While the International Monetary Fund (IMF) has repeatedly appraised the country’s reforms, especially in the banking sector, the World Bank maintains that by becoming more integrated into the world through free trade agreements, Vietnamese businesses are opened to a lot more opportunities in export.
In the first six months of this year, Vietnam has signed two major trade deals with Korea and the Russia-led Eurasian Economic Union (EEU). The Vietnam – EEU agreement in May has been called a “historic act”, as it was the first international document that created a free trade zone between the EEU and a third party.
Trade between the two parties is expected to grow to $10 billion by 2020 from the current $4 billion.
However, attracting FDI and boosting export only will not be sufficient to help Vietnam’s economy reach a higher level. The country needs to keep evolving its competitive edge and business environment, which include addressing the low quality of infrastructure and lengthy investment procedures.
The most recent reforms of Vietnam are the lift of foreign ownership in businesses on the stock market, and the effect of a spate of revised laws, including those on investment, enterprises and real estate, from July 1.
The new investment law removes the procedures of investment registration certificates to domestic projects, while reducing the time of issuing the certificates to foreign investors from 45 days to 15 days. Also in accordance with the new regulation, only companies with at least 51 per cent foreign capital have to apply for the procedure. The former law required all of foreign-invested firms, regardless of the holding percentage, to do so.
Source: http://www.dealstreetasia.com
Key words: Vietnam, FDI review, Investment, foster, economic growth
