Since the beginning of this year, Vietnam has attracted more than US$45 billion in foreign direct investment (FDI) capital. This is a positive sign but also poses a number of challenges to the country. In an interview granted to a VOV reporter, Phan Huu Thang, head of the Foreign Investment Agency under the Ministry of Planning and Investment (MPI), said that it is essential to have an overall view of the achievements and shortcomings in FDI attraction and disbursement in recent times.

FDI is one of the sources that boosts the country’s socio-economic development, and sometimes in the past, it has even accounted for one third of the total capital in the whole of society. Such a large amount of FDI capital demonstrates that Vietnam’s investment environment is attractive and that many foreign investors are interested in the local market, Mr Thang said.

However, he also raised concerns over the disbursement of FDI, saying that at present many projects are moving to a new phase, with changes in both quantity and quality.

Reporter: It is said that a large amount of FDI is destined for the real estate sector. Could you elaborate on this?
Mr Thang: We made a careful plan for the allocation of FDI. Over US$45 billion has been invested equally in the production and service sectors, but there is a growing trend to invest in the production sector. It is regretable that the amount of FDI allocated to the agro-forestry and aquaculture sectors is too low. Nevertheless, we should understand needs for investment in various fields during the current process of national industrialisation and modernisation.

In recent times, there have been many large foreign invested projects in the bigger cities that have focused on the real estate sector. Five-star hotels projects are also funded by foreign investors to help Vietnam open up its market and welcome more tourists. The question is how to have a good zoning plan and long-term development strategy. It is also necessary to pay due attention to environmental protection, as mentioned in the law, on investment which regulates that businesses must meet the right environmental conditions to get an investment license. If any business fails to meet these conditions during its operations, it will be dealt with according to the law.

VOV: What measures has the MPI devised to bridge the gap between the regions?

Mr Thang: One of our main activities is to enhance the promotion of investment in disadvantaged areas. The national investment promotion programme also highlights this point. Vietnam has tried to attract FDI projects that develop high-technologies to the big cities and to develop heavy industry and other fields in other areas.

VOV: Can you tell us about the initial results of the research on FDI disbursement?

Mr Thang: Currently, the MPI has sent teams to check disbursement in the northern provinces of Hai Duong, Hai Phong City and some southern provinces. The work will begin in the central region in August 11 and the initial checks have showed satisfactory results. Hai Phong City and Hai Duong are committed to raising disbursement from US$160 million to US$200 million.

VOV: What obstacles should be removed to accelerate disbursement?

Mr Thang: Since early this year Vietnam has disbursed around US$6 billion and will try to increase this to around US$10.5 billion by the end of this year. People wonder that the registered capital of some projects is too big, widening the gap between registered and implemented capital. However, some investors can spend 5-6 years to disburse US$6-7 billion projects.

Currently, poor infrastructure and a lack of human resources are the two biggest obstacles. For example, some roads linking ports to city centres are too narrow or too long. However, the country cannot meet the demands from big investors for thousands of skilled engineers. The Government is giving priority to speeding up the implementation of key infrastructure and education projects. However, it will require a long time to resolve these problems. Another obstacle is administrative procedures. Although the ministries and departments have made great efforts to improve administration reform, the results did not achieve as much as expected.

VOV: Do you mean that it will take a long time to narrow the gap between registered and implemented capital?

Mr Thang: Yes, because the bigger project is, the longer the disbursement takes. Furthermore it will need a long time to resolve the obstacles relating to the infrastructure and education.

VOV: Thank you very much.