FDI: Trying To Reach Year’s Targets
Attracting capital from new and operational projects and capital disbursement in Ba Ria-Vung Tau Province in particular and Vietnam in general in the first seven months witnessed mixed trends, promising another tough year in investment attraction
In July, Nippon Steel Pipe Vietnam Co. received approval from the province to build a twisted steel pipe factory in Phu My 2 Industrial Park in Tan Thanh District with total investment capital of US$42 million. Nippon joins with other Vietnamese and Japanese partners, including Metal One Corp., Vietnam Steel Corp., Nippon Steel Trading Co., Marubeni-Itochu Steel Inc., Hanwa Co. and Sumitomo Corp., to carry out the 100,000-square-meter steel plant whose capacity is 60,000 tons per year.
From Ba Ria-Vung Tau
In July, the province granted a license for a US$16-million plant specializing in grinding stones and processing products from colored metals invested by a joint venture of Kenyan and Vietnamese investors.
These were two of the four foreign-invested projects capitalized at US$74 million licensed in the province in July. The two others were a Korean-invested US$2-million plant manufacturing salt for export and U.S.-invested Ban Mai Toan Cau specializing in tourism services. This was much lower than those in the first months of this year and the same month of last year, according to a recent report of Ba Ria-Vung Tau Province Investment Promotion Center.
Totally, in the first seven months, 27 projects capitalized at US$2.4 billion were licensed in the province.
In the period, seven operational projects increased their investment capital up to US$121.5 million, of which large ones were a gemstone plant (US$50 million), Bunge Co. (US$40 million) and Meisheng Co. (US$15 million).
As of the end of July, there had been 282 foreign-invested projects with total registered capital of over US$27 billion in the province, of which industrial parks lured 108 projects worth over US$10 billion.
The highlighted trend in the period was that a few foreign-invested projects are capitalized at hundreds of millions of dollars. This was also the trend of foreign direct investment (FDI) attraction in the whole country.
Disbursed capital reached some US$100 million in July and US$620 million in the January-July period, up 37.8% year-on-year. The disbursement was mainly from such projects as Posco Steel, SP-PSA International Port, Cai Mep International Port, Saigon-Vietnam International Port and Tan Cang-Cai Mep Port.
Besides granting licenses for foreign-invested enterprises, the provincial authorities have also done away with bad projects to save land for other potential investors. In the first seven months, five projects capitalized at US$19.2 million were forced to cancel their operations.
To the whole country
The situation of Ba Ria-Vung Tau Province in the period partly reflected the general situation of FDI attraction in Vietnam.
The inflow of FDI into the country dropped to a mere US$508 million in July compared to the monthly average US$1.3 billion in the first half, marking a clear downtrend in FDI attraction. The downtrend has been clearer in recent months, dropping from US$1.5 billion in May to US$800 million in June, according to a report from the Ministry of Planning and Investment.
Last month, of the total 95 freshly licensed projects, there were no new capital-intensive projects worth hundreds of millions of dollars each as in the previous months, according to the report released by the ministry’s Foreign Investment Agency.
Last month also saw 16 operational projects increasing capital by a combined US$190 million, taking the total amount of newly-injected funds in operational projects to US$715 million so far this year.
Despite the slump in July, the total number of foreign-invested projects in the year to date was 533 with total pledged capital of more than US$8.41 billion, down 16% in the number of projects but still up of 5.4% in capital year-on-year.
However, according to the agency, the total investment in the country so far this year, inclusive of additional funds into operational projects, was only US$9.13 billion, equivalent to 68.2% of that in the same period last year.
The Foreign Investment Agency predicts Vietnam will receive US$22-25 billion in newly registered and additional FDI capital this year, an increase of 5-10% from 2009, owing to the recovery of the global economy. New FDI approvals in 2009 plunged as much as 70% from the previous year due mainly to the global economic crisis.
According to the agency, FDI disbursements in Vietnam totaled about US$1 billion last month, taking the January-July figure to US$6.4 billion, up 1.6% from the same period last year. Given the average monthly disbursement of around US$900 million, it is predicted that FDI disbursement will reach US$11 billion this year, slightly higher than last year’s figure of US$10 billion.
This year, foreign-invested enterprises have benefited from the regional recovery, as seen in their trade values. Their exports in the first seven months surged 26.7% over the same period to some US$20.6 billion. If crude oil export is excluded, this value still reached US$17.67 billion, up 40.1% year-on-year.
Meanwhile, the FDI sector spent US$19.5 billion on imports in the seven months, up 46.4% over the year-ago period.