Many
billion-dollar foreign direct investment (FDI) projects have been registered in
Vietnam since 2006, accounting for one-fourth of the total FDI commitment in
the country.
Those projects are expected to have
significant influence on the economy, but few have been implemented so far.
Ninh Kieu finds out why.
After three years’ delay, Taiwanese consortium
Formosa Plastics Group started developing a giant steel manufacturing and
seaport complex in central Ha Tinh province’s Vung Ang Economic Zone.
Formosa representative Hsu Chih Hao told VIR
that the $8.9 billion project would be operational in 2014, creating 10,000
jobs, and be one of the five largest steel factories in the world.
During February-May 2011, Formosa disbursed
around $150 million for the project, not including the $30 million the group
gave Ha Tinh People’s Committee to clear the site.
Formosa’s commitment to this mammoth project
is what the Vietnamese government wants other foreign investors to replicate.
Twenty-one, billion-dollar projects with
committed capital of $61 billion have been registered in Vietnam since 2006,
according to the Ministry of Planning and Investment (MPI).
Such giant projects in the fields of
manufacturing, information technology, oil refinery, energy and real estate
account for more than one-fourth of total FDI commitment capital in Vietnam.
Commitments to billion- dollar projects even made Vietnam become one of the
world’s most attractive places for investments in 2008 with registered capital
recorded at $74 billion.
“If the investors implement those gigantic
projects, this will have a very big influence on the economy,” said Nguyen Mai,
chairman of Vietnam Association for Foreign Invested Enterprises.
Not only creating jobs, the development of
such projects also helped ease foreign currency shortages caused by a widening
trade deficit, Mai said, adding that their disbursement was also a gravitational
force for FDI inflows into Vietnam.
Vung Ang Economic Zone Management Authority
reported that many foreign and domestic investors in the zone had followed
Formosa to push up the implementation of their projects since Formosa started
construction in February, 2011. However, investors of only four billion-dollar
projects have walked instep with Formosa.
Asia Coast Development LLC and New City
Properties Development Company are constructing $4.2 billion and $4.3 billion
tourism projects in Ba Ria-Vung Tau and Phu Yen provinces, respectively. Intel
operates its $1 billion chipset factory in Ho Chi Minh City and Posco, one of
the world’s largest steel makers, last year inaugurated its $1.2 billion steel
factory in Ba Ria-Vung Tau.
Most investors blame site clearance
difficulties. Site clearance issues were also blamed for stalling Formosa’s
project in Ha Tinh for three years, the group said.
A representative at Vung Ro Petroleum, which
registered to build a $1.7 billion oil refinery in Phu Yen province, also claimed
site clearance issues had held the project back for two years.
China Steel Sumikin Vietnam – a consortium
between China Steel Corporation, Sumitomo Metal, Sumitomo Corporation, Sumikin
Bussan and Formosa – had to delay construction of its $1.15 billion steel
factory in Ba Ria-Vung Tau province last August due to the similar
difficulties.
But, this is not the only reason for
investors’ indolence. Mai said many investors had delayed billion-dollar
projects due to poor financial health.
The $9.8 billion Ca Na steel manufacturing
project in Ninh Thuan, registered by debt-ridden Vinashin and Malaysia’s Lion
Group, is a typical exam. This was to have been the largest FDI project in
Vietnam.
However, the investors did nothing to push the
project forward, despite Ninh Thuan People’s Committee urging investors to
implement their commitments. Early this year, the provincial authority decided
to revoke the investment certificate and change the project into an industrial
park.
Poor financial ability also forced Phu Yen
People’s Committee and Quang Nam People’s Committee to end the destinies of
two, billion-dollar projects, the $1.68 billion Creative City and $4.15 billion
Dragon
Beach Resort as the investors declined to pay
deposits for their projects.
“During the past years, we have been focusing
on luring new FDI commitments, rather than quality of projects. This is why we
saw lots of billion-dollar projects registered in recent years,” said Mai.
He said those stalled FDI projects were having
serious impact on residents who had to move to other locations due to site
clearance work. Furthermore, delays at those mammoth projects mean land
resources are used ineffectively.
“They took investment opportunities from other
investors, but have done nothing so far,” Mai noted.
Dang Huy Dong, Vice MPI Minister, admitted
that the commitment at billion-dollar projects did not mirror the real quality
of FDI inflows into the country. Although FDI commitments to Vietnam have been
declining for three years, Dong believed the result was not bad because “we
have carefully appraised projects to reject unrealistic billion-dollar ones”.
VIR
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