Vietnam is losing out on foreign direct
investment to rival countries, despite global inflows expected to rebound next
year.
The
Ministry of Planning and Investment’s (MPI) Foreign Investment Agency data
shows that foreign direct investment (FDI) commitments to Vietnam in 2012’s
first four months declined 31.5 per cent and FDI disbursement dropped 0.3 per
cent from a year earlier, a stark contrast to global trends.
Despite
global economic turmoil, global FDI inflows last year rose by 17 per cent, to
$1.5 trillion, surpassing their pre-crisis average, according to United Nations
Conference on Trade and Development (UNCTAD).
Based
on the factors such as gross domestic product (GDP) growth and cash holdings by
transnational corporations, UNCTAD estimates that FDI flows will rise
moderately in 2012, to around $1.6 trillion.
“It
seems that Vietnam is losing out in catching global FDI inflows. Foreign
investors are neglecting Vietnam to make investments in other nations,” said
Nguyen Mai, president of Vietnam Association of Foreign Invested Enterprises.
Meanwhile,
FDI in Indonesia rose by a massive 30 per cent to $5.7 billion in the first
quarter compared to the same period in 2011, the highest ever recorded for any
quarter in Indonesia’s history, according to the Indonesia’s Investment
Coordinating Board.
At the
same time, FDI rose 91 per cent in Thailand, confirming the continued strong
confidence of foreign investors in this country, according to Board of
Investment of Thailand.
“These
figures mean that foreign investors, especially transnational companies, still
have lots of money and are expanding investment around the world. The question
is that why they didn’t increase investment in Vietnam?” said Mai.
To grab
the opportunity of global FDI boom, Vietnam should put greater efforts on
beautifying its business climate by continually improving legislation system,
infrastructure network and human resources, he said.
Specifically,
Prime Minister Nguyen Tan Dung last September issued Directive 1617/CT-TTg
asking ministerial bodies and local authorities to “intensify” and “regulate”
FDI management systems.
However,
foreign investors are unconvinced.
Hong
Sun, general secretary of Korea Chamber of Business in Vietnam, said Vietnam’s
investment climate had become “worse and worse” since 2008 because of the
economic turmoil and regular changes in government policies.
“The
government is tightening conditions for investments in Vietnam and increasing
taxes, land fees, while slowly handling obstacles including poor transport
infrastructure systems, power outages and a lack of skilled labourers,” said
Sun.
Mai
warned the FDI in Vietnam would continue decline as foreign investors have
plenty of options in neighbouring countries. Japanese companies, for example,
are increasingly investing in Vietnam, but they are also increasing investments
in neigbouring countries.
Statistics
from Japan External Trade Organisation showed that the number of Japanese FDI
projects from 2008 to 2011 in Thailand hit 1,393, in Indonesia 1,045 and
Vietnam 572.
On the
other hand, total Japanese FDI capital during the same period in Thailand was
$13.3 billion, in Indonesia $4.2 billion and in Vietnam $5.5 billion.
Nhu
Ngoc | vir.com.vn
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