FDI surge set to continue

Dang Xuan Quang, deputy director of the Ministry of Planning and Investment (MPI)’s Foreign Investment Agency (FIA), told VIR that, “The recovery of Vietnam’s economy as well as the global economy will help make 2016 an even more favourable year for Vietnam in terms of foreign direct investment (FDI).”

“This will also be boosted by various landmark free trade agreements (FTAs), including the EU-Vietnam FTA, the ASEAN-EU FTA, the Trans-Pacific Partnership (TPP) and the Vietnam-Republic of Korea FTA. All these will have a strong impact on local economic development,” he said.

“Additionally, the government’s new policies to encourage FDI should be fully effective this year. This would enable Vietnam to lure at least the same amount of FDI as it did in 2015,” he added.

According to the FIA, Vietnam’s newly registered and expanded FDI surged 101.2% year-on-year to US$1.33 billion in January.

During January 1-20, 2016, the country licensed 127 new foreign invested projects with the total registered capital of US$1.01 billion (up 157.9% on year), and approved 56 others to increase their investment capital by US$323.4 million in total, up 19.2%.

The strong increase in FDI attraction during the period was attributed to the licensing of many big projects in the first days of the year.

These major projects include the US$210.58 million project funded by Malaysia’s Berjaya Group to operate computerised lottery in Vietnam, the US$110 million apparel project from Singapore’s Maple Group, and New Wing Interconnect Technology’s US$100 million earphone and connecting wire factory.

This is a very positive indicator for the country’s FDI attraction over the remaining year. Quang went on to predict that manufacturing and processing would remain the most attractive sector for foreign investors this year, followed by real estate.

Industry insiders, however, have warned that the target of luring more than US$23 billion in FDI this year would be a hard task, as this figure was a record high in 2015, a year when five billion-US dollar projects were newly-licensed or allowed to raise their investment capital, totalling US$8.2 billion.

But Quang was upbeat about the prospect of a bumper year in terms of FDI attraction and disbursement in 2016, as several FTAs will come into effect, and the country’s GDP growth is expected to rise to 6.7%-up from 6.68% last year.

The hopes of securing an even higher amount of FDI this year will depend-to a large extent-on the Victory petrochemical project by Thai investors in the central province of Binh Dinh.

The final decision on whether or not to implement this US$22 billion project will be made in June at the earliest, according to Quang.

More hopes are also pinned to the fate of some build-operate-transfer power projects which carry an investment capital of around US$2 billion each.

The Vietnamese government has asked ministries, relevant agencies and localities to fast-track investment certificates for these projects. If everything goes smoothly, they will make a significant contribution towards the country’s FDI attraction target.

“FDI disbursement could reach at least US$15 billion in 2016, compared to US$14.5 billion in 2015,” Quang added.