Weak support industry in Vietnam adds little value to FDI products

Samsung workerThe benefits of foreign direct investment (FDI) in Vietnam have been limited by an ailing local support industry that fails to add value to products.

Hirotaka Yasuzumi, managing director of the Japan External Trade Organization (JETRO), said Japanese firms, Vietnam’s biggest investors in the first half of the year, find it difficult to expand their business in the country where the use of locally made parts is less than 30 percent. The number is 53 percent for Thailand and 60 percent for China. Read more

Vietnam’s Lost Charm

Barun RoySomething has gone wrong for Vietnam. It finds it’s no longer the same darling of foreign investors it used to be. For three years in succession, it has failed to reach its foreign direct investment (FDI) targets and the government, judging from recent remarks by its ministers, is worried. If the slide continues, they fear, there will be an adverse impact on economic growth, and if economic growth falters, investors could become even more hesitant. Read more

Gov’t asked to create investor-friendly environment

Vietnam Business Forum, Dec 2012

Vietnam is still a promising destination for foreign investment in 2013, but the Government needs to urgently create a business environment friendly to investors if the country is to continue attracting foreign direct investment.

The year 2013 will see many other countries emerging as competitors in attracting investment, representatives of foreign business associations in Vietnam said.

Urgent need for improvements

Kim Jai Woo, chairman of the Korean Chamber of Commerce in HCMC (KoCham), told the Daily in an interview via email that the global financial crisis had lasted since 2008, but the global economy is expected to recover in 2013.

As China is cutting investment incentives for foreign companies, more Korean investors this year will come to Vietnam in areas of manufacturing and infrastructure, such as ports, bridges, and roads, said the KoCham chairman.

Nevertheless, if Vietnam fails to create an agreeable environment, Korean firms will shift their production to other countries, he added. There’re now about 2,500 Korean businesses operating in Vietnam.

Herb Cochran, executive director of the HCMC Chapter of the American Chamber of Commerce in Vietnam (AmCham), said Vietnam is no longer the top-rated investment destination for U.S. companies, since Indonesia, Malaysia, Bangladesh, and even Myanmar seem to attract more interest these days.

While many U.S. firms are successful in Vietnam, a growing number of AmCham companies are finding it more difficult to conduct business here than in the past years. Recent moves by the Government have caused numerous investors to rethink their business and expansion plans in Vietnam, Cochran said.

“Non-market administrative decisions on which items can be imported, how products can be priced, who can work in Vietnam, which programming can be broadcast on television, who can provide health care, and much more have contributed to a perception that investors are not welcome in Vietnam,” he added.

Given the current state of the economy, Vietnam should make every effort to entice foreign investment and resources. To retain existing and attract new FDI, Vietnam’s Government needs to listen to existing FDI companies, according to the representative of AmCham.

“We meet regularly with the Government in the Vietnam Business Forum and other consultations opportunities to discuss what the Government and businesses could do to attract more U.S. FDI,” said Cochran. “Unfortunately, not many of our recommendations have been accepted in recent years, nor have many recommendations from other foreign business associations or international experts,” he said.

In addition, Kim Jai Woo from KoCham added that the Government needs to pay more attention to decisive factors concerning investment, such as curbing production cost increase.

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FDI in apparel production declines

Vietnam’s textiles and apparel sector is seeing a decline in foreign direct investment (FDI) during the past several years, and the sector is being held back by its reliance on imports of raw materials, according to the Viet Nam Textile and Apparel Association.

FDI in the sector has fallen from an annual average of US$ 460 million during the peak period of 2000-08, and the number of FDI projects has also decreased during the past three years.

Total registered capital from foreign investors in the sector for 2009 and 2010 was at $185 million and $169 million respectively.

Foreign investors also focused heavily on garment making that required low investment capital. They paid less attention to the production of raw materials and accessories such as fabrics and processing such as dyeing, that required high investment capital and high technologies and no promise of a quick return on investment, said the association.

Le Quoc An, former chairman of the association, attributed the situation to the fact that Viet Nam still lacked industrial zones specialising in fibre, textile and dyeing on large enough scale to attract major overseas companies.

Viet Nam earned $ 14 billion from textile and apparel exports last year, but it had to spend up to $ 9 billion on imports of raw materials and accessories.

An said the reliance on imports was the Vietnamese clothing industry’s greatest weakness. However, he said it was also a good opportunity for the sector to organize its investment priorities and plan for solid growth in the future.

“Once the sector does this, giant foreign investors will enter Viet Nam,” An said.

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FDI into Vietnam continues its plunge during first seven months – down 67% year-on-year

HA NOI — Viet Nam attracted US$ 8 billion in foreign direct investment (FDI) during the first seven months of this year, down by 67 per cent year-on-year, according to the Foreign Investment Agency’s latest statistics.

As many as 584 new foreign-invested projects, worth $ 5.2 billion, were granted licences during the period, about 56 per cent of the number at the same time last year.

However, capital in existing projects “surged” by 5.2%. More than 230 projects registered to increase their capital by a total of $ 2.83 billion.

During January-July, FDI disbursement almost equalled that for the same period last year, reached $ 6.25 billion or 99.2 per cent of last year’s figure.

Of the 49 countries and territories supplying FDI to Viet Nam, Japan remained the largest source of foreign investment. Japanese investors registered to invest $ 4.29 billion, making up 53.4 per cent of total FDI.

Samoa surprisingly came second, pumping in $ 890 million or 11 per cent of total FDI. It was followed by South Korea with more than $ 600 million and Hong Kong with $ 492 million.

The processing and manufacturing industry took lead in term of investment capital, gobbling $ 5.5 billion or 68.5 per cent of total national FDI.

Southern Binh Duong Province’s $ 1.2 billion Tokyu Binh Duong urban area, the largest in seven months, lifted real-estate to second position at $ 1.61 billion. The project accounted for 20 per cent of the total FDI.

The retail trade and repair sector attracted the third largest FDI at $ 314 million.

In January-July, the southern provinces of Binh Duong and Dong Nai, the northern port city of Hai Phong, northern Bac Giang Province and the economic hubs of HCM City and Ha Noi remained the most attractive locations for foreign investors.

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FDI into Vietnam continues to fall: down 27.3% in first half of 2012

FDI in Vietnam 2010-2012eDuring the first half of this year, foreign investors have committed to FDI of about $ 5.96 billion, a 27.3 per cent reduction from last year. New FDI only registered the total capital of US$ 4.76 billion, a sharp fall of 24.6 percent from 2011. Expansion FDI in existing projects also decreased. If present trends continue, FDI in 2012 could be about one-half of FDI in 2010.

Vietnam said it may fail to achieve its goal of attracting at least $15 billion of committed foreign direct investment this year amid a faltering global recovery and a domestic growth slowdown. Disbursement of foreign investment may fall to $10 billion this year, lower than an earlier forecast of $11 billion. Vietnam aimed to attract $15 billion to $16 billion of pledged foreign investments in 2012, according to a Dec. 30 government statement.

On a positive note, previously approved projects are getting underway. An MPI report released on June 26 showed that US$ 900 million worth of previously approved FDI has been implemented, raising the total FDI capital disbursed in the first six months of the year to US$ 5.4 billion, higher than the US$ 5.3 billion level of the same period of the last year, and equal to that of 2010.

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Vietnam loses appeal to foreign investment amid economic woes

Vietnam, once seen as on its way to joining economic tigers Taiwan and South Korea, has seen foreign investment decline sharply amid labor problems, crumbling roads, and the global financial crisis.

Vietnam’s economic future is on the rocks.

Foreign firms in this ramshackle but once booming factory district just outside Ho Chi Minh City are watching bottom lines and studying other markets closely, both of which have become threats to Vietnam’s economic growth.

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FDI down as investors chill

July 11, 2011. Vietnam may lose out to neighbouring competitors if this year’s downtrend in foreign direct investment inflows is anything to go by.

Registered foreign direct investment (FDI) in the first six months of 2011 fell 48.1 per cent year-on-year to $ 5.6 billion, according to the Ministry of Planning and Investment’s Foreign Investment Agency (FIA).

Disbursed FDI from January 1 to June 22 also slightly dropped by 1.9 per cent year-on-year to $ 5.3 billion, ending the upward trend of the net FDI inflow over the previous two years.

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U.S. on track to be top investor in Vietnam — U.S.-ASEAN Business Council

HANOI (AFP) — May, 2009. The United States is on track to become the leading foreign direct investor in Vietnam, the head of a US business delegation said.

“I’m willing to wager… that within no more than three years, and perhaps a good deal less, the United States will be the largest foreign direct investor in Vietnam,” Matthew Daley, president of the US-ASEAN Business Council, told reporters.

He said that in the first quarter of this year, Vietnam registered about six billion dollars in foreign direct investment, more than half of which, about 3.86 billion dollars, came from American firms.

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