(VEN) – Minister of Planning and Investment Bui Quang Vinh said that the government would continue to offer proper preferences for investors, at a People Ask, Ministers Answer session regarding foreign direct investment (FDI) attraction in Vietnam in the near future.
Vinh said that 20 years ago Vietnam had a cheap labor force, abundant natural resources and great preferences. Vietnam even spent money to clear ground for the construction of projects to attract foreign direct investment (FDI). However, these advantages are mitigating as the country is tightening its financial policies and choosing high-tech, high-added-value and environmentally-friendly projects.
By June 2013 Japan led the 101 countries and territories investing in Vietnam with 1,900 projects and total registered capital of US$32,667 million.
In the first six months of this year Japan was also the number-one investor among the 45 countries and territories investing in Vietnam with total new and supplementary capital of US$3,992 million.
Meanwhile, infrastructure remains inadequate, administrative procedures overly bureaucratic, and labors costs are no longer Vietnam’s comparative advantage due to economic growth and per capita increased income.
As a result of these less obvious advantages, the Vietnamese investment environment has become less attractive than other countries in the region such as Thailand and Indonesia. This is why although Japan is the number-one investor in Vietnam it has only 1,500 businesses in the country compared with 7,000 in Thailand.
Mitigating advantages also caused a decline in FDI flows into the country in recent years. Statistics from the Foreign Investment Department show that Vietnam attracted US$64 billion in FDI in 2008, US$21.48 billion in 2009, US$18.1 billion in 2010, US$14.7 billion in 2011 and US$16.3 billion in 2012.
However, FDI disbursement did not reduce, averaging US$11 billion annually in recent years showing a positive sign and helping bridge the division between registered and invested FDI capital. Specifically, Vietnam disbursed US$5.7 billion worth of FDI in the first six months of this year, a 5.6 percent increase from a year ago.
As a result of progressive disbursement, the FDI sector has made important contributions to the Vietnamese economy. Currently FDI accounts for one-quarter of total investment in Vietnam and more than 60 percent of export revenues. FDI businesses have also created two million direct jobs and possibly three million in the near future. They have also brought their new technology and managerial skills to Vietnam to contribute to restructuring the economy.
In recognition of their important contributions, the Vietnamese Government still wants to boost FDI. To achieve the goal, Vietnam will provide new preferences for foreign investors in high-added-value sectors to benefit both investors and the country, said Bui Quang Vinh./.
By Nguyen Hoa