New laws likely to see FDI spike
Foreign direct investment could sharply jump in the second half of this year, after the amended Investment Law and Enterprise Law take effect in July 2015.
Dang Xuan Quang, deputy director of the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, said foreign direct investment (FDI) trends in 2015 would be possible, despite decreased FDI commitment in the first quarter.
According to the FIA, foreign investors committed to invest or expand their involvement in 369 projects by US$1.83 billion in the first quarter, a 45% year-on-year slump. However, disbursed FDI reached US$3.05 billion, up 7% on-year.
“FDI disbursement figures reflect the stability of foreign investor confidence and evidence of a growing momentum in foreign inflows into the country”, Quang said, explaining that many investors were in preparatory process to start their investment after the enforcement of the two laws. “I believe FDI will increase sharply in the second half of this year.”
The result in the first quarter says nothing about 2015. We see a positive trend this year, given the improving investment climate and confidence of investors”, he added, referring to the negotiations with Samsung C&T Corporation, Tata, Sembcorp, and ExxonMobil.
These projects, mostly in infrastructure, are important to improving the investment climate and attract investment from other foreign investors.
According to the FIA, Samsung Power is going to invest in the Vung Ang 3 power plant in Ha Tinh province, while Tata Power currently in talks with the government for a build-operate-transfer contract for the Long Phu 2 power plant.
A recent report of Japan External Trade Organisation showed that 7% of Japanese companies wanted to expand investment in Vietnam, while 60% reported profits. As Japan is among the largest sources of FDI to Vietnam, this report offers a positive signal of improved Japanese investment inflows into the country.