Nov 15, 2014

Vietnam - Singapore takes lead in ASEAN FDI inflows into Vietnam

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Singaporean investors top those from other member countries of the Association of Southeast Asian Nations, better known as ASEAN, in investing in Vietnam with 1,330 existing projects worth $32.6 billion, according to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment.

With those figures, Singaporean-owned projects in Vietnam accounted for 54 percent of total projects and 62.3 percent of total registered capital from all the foreign direct investment (FDI) projects financed by ASEAN investors by the end of October, said the FIA.

Malaysia ranked second with 475 projects with a total investment of $10.7 billion, making up 19.3 percent of total projects and 20.5 percent of the total registered capital.

It is followed by Thailand with 370 projects with total investment of $6.65 billion, accounting for 15.04 percent of total projects and 12.7 percent of the total registered capital. Thailand is followed by  Brunei, Indonesia, the Philippines, Laos and Cambodia.

By the end of last month, investors from ASEAN had 2,459 valid projects with total registered capital of US$52.34 billion; accounting for more than 21.4 percent of total foreign investment capital registered in Vietnam.

The estimated size of an FDI project financed by investors from ASEAN averages about $21.3 million, higher than the average rate of other FDI projects funded by non-ASEAN investors, or about $14.45 million.

Proactive moves

According to statistics, as of September ASEAN countries have invested in 18 out of 21 business sectors in Vietnam.

In particular, the field of processing and manufacturing industries topped with 950 projects worth $20.07 billion in registered capital, accounting for 39.08 percent of total projects and 38.72 percent of total investment.

The sector drawing the second-most attention from ASEAN investors is real estate, with 92 projects worth a total $16.48 billion in registered capital, accounting for 3.78 percent of the total number of projects and 31.81 percent of total investment.

It is followed by the construction sector, with 166 projects with registered capital of $3.03 billion, representing 6.8 percent of the total number of projects and 5.85 percent of total investments.
Firms managed by ASEAN investors in Vietnam have two primary forms - a 100-percent foreign-owned firm and a joint venture.

While the former had 1,794 projects with registered capital reaching $32.68 billion (accounting for 73.8 percent of total projects and 63 percent of total investments), the latter had 576 projects with registered capital of $17.67 billion (accounting for 23.69 percent of the total number of projects and 34.09 percent of total investment).

ASEAN investors have invested in 55 out of 63 provinces and cities in Vietnam, with investment focusing on large cities with better infrastructure development. The most are located in Ho Chi Minh City, with 1,036 the projects worth $13.2 billion in registered capital, representing 42.6 percent of the total number of projects and 25.46 percent of total investment.

HCMC is followed by the capital city of Hanoi (391 projects, $8.53 billion) and the southern province of Ba Ria - Vung Tau (66 projects, $6.16 billion).

The prospect for investment cooperation between Vietnam and ASEAN is tremendous because Vietnam is an active member in this community, said the FIA.

Vietnam has clinched a variety of bilateral cooperation deals with the member countries in every field, and has associated socioeconomic development with integration into the international economy.

ASEAN is currently transforming itself into a new stage of development, aiming to form an ASEAN Economic Community (AEC) in 2015 with three pillars: political-security, economic and socio-cultural.

After the AEC is established with the realization of the ASEAN Comprehensive Investment Agreement (ACIA), the ASEAN Trade in Goods Agreement (ATIGA) and ASEAN Framework Agreement on Services (AFAS) will help increase the attractiveness of the region to FDI.

Therefore, the AEC will also open the door to new FDI to Vietnam, said FIA.



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Saigon Business Corporation Pte Ltd (SBC) is incorporated in Singapore since 1994. 

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