FDI inflows to make a come-back next quarters
Despite the slowdown of FDI inflows in the first five months of this year, projects approved in the rest of the year will get the capital source back on track, officials forecast.
Reports from the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment showed that foreign firms registered to invest US$9.9 billion in the first five months of this year, down 18.4% year-on-year.
This year’s capital reductions can be attributed to the fact that the first five months of 2017 saw some new big-ticket projects licensed while those already operating with high capital also expanded their investment scales, an FIA representative said.
In the first five months of 2017, five billion-US-dollar projects were granted investment certificates. They were three BOT power projects of Japanese and Singaporean investors, including the US$2.79 billion Nghi Son 2 BOT Thermal Power Plant in Thanh Hoa Province, the $2.58 billion Van Phong 1 BOT Thermal Power Plant in Khanh Hoa Province and the US$2.07 billion Thermal Power Plant in Thai Binh.
In addition, the five months last year also saw the Samsung Display project to raise capital by US$2.5 billion in Bac Ninh.
Meanwhile, the biggest projects to date this year were just under half a billion dollars, such as the US$501 million LG Innitek factory of Korean investors in Hai Phong City and the US$365.76 million Bac Lieu Wind Power Plant Phase III of Thai investors besides a project of China’s Regina Miracle International Vietnam Co., Ltd to raise capital by US$260 million.
The FDI inflows also reduced in the five months of this year as with the development of a new generation FDI attraction strategy, Vietnam is aiming for better quality capital inflows with the strict selection on projects that can make high added value and create spillover for local production.
No cause for alarm
However, the FIA representative was not concern about the slowdown, saying that the FDI inflow would be back on track when new projects are approved in the coming quarters of the year.
Nguyen Mai, President of the Vietnam Association of Foreign Investment Enterprises (VAFIE), expressed a similar view, saying the drop should only be used for reference purposes and does not fully reflect the bigger picture.
“Foreign investors have already spent lots of money in fresh FDI, so it would take some time for these companies to get returns on their investment and invest in newer projects. So the drop does not fully present the bigger picture and should be used for reference only,” Mai told the media.
Mai also said that a market report prepared by the American Chamber of Commerce clearly stated that in 2018, Vietnam continues to be a haven for overseas investors in electronics and polyester yarn factories due to "low costs, abundance of labor and matter-of-fact permitting process."
Besides, the FDI inflows to Vietnam next months are also expected to rise after recent visits of Vietnamese leaders to South Korea, Singapore and Japan, where they met and discussed with many big companies to encourage them to continue investing in the country.
The visits have so far brought good results. After the visit to Singapore of Prime Minister Nguyen Xuan Phuc in late April, Singapore’s Sembcorp signed a memorandum of understanding with the Quang Ngai Province on the development of the Dung Quat Power Project with total investment capital of over US$2 billion.
The state visit of President Tran Dai Quang to Japan in May is also expected to open the possibility that many large projects of Japanese investors will continue to select Vietnam as an investment destination.
With the move, experts said that it is too early to say that FDI inflows into Vietnam are slowing down.
Singapore’s Sembcorp will invest over US$2 billion in the Dung Quat Power Project.
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In the first five months of 2017, five billion-US-dollar projects were granted investment certificates. They were three BOT power projects of Japanese and Singaporean investors, including the US$2.79 billion Nghi Son 2 BOT Thermal Power Plant in Thanh Hoa Province, the $2.58 billion Van Phong 1 BOT Thermal Power Plant in Khanh Hoa Province and the US$2.07 billion Thermal Power Plant in Thai Binh.
In addition, the five months last year also saw the Samsung Display project to raise capital by US$2.5 billion in Bac Ninh.
Meanwhile, the biggest projects to date this year were just under half a billion dollars, such as the US$501 million LG Innitek factory of Korean investors in Hai Phong City and the US$365.76 million Bac Lieu Wind Power Plant Phase III of Thai investors besides a project of China’s Regina Miracle International Vietnam Co., Ltd to raise capital by US$260 million.
The FDI inflows also reduced in the five months of this year as with the development of a new generation FDI attraction strategy, Vietnam is aiming for better quality capital inflows with the strict selection on projects that can make high added value and create spillover for local production.
No cause for alarm
However, the FIA representative was not concern about the slowdown, saying that the FDI inflow would be back on track when new projects are approved in the coming quarters of the year.
Nguyen Mai, President of the Vietnam Association of Foreign Investment Enterprises (VAFIE), expressed a similar view, saying the drop should only be used for reference purposes and does not fully reflect the bigger picture.
“Foreign investors have already spent lots of money in fresh FDI, so it would take some time for these companies to get returns on their investment and invest in newer projects. So the drop does not fully present the bigger picture and should be used for reference only,” Mai told the media.
Mai also said that a market report prepared by the American Chamber of Commerce clearly stated that in 2018, Vietnam continues to be a haven for overseas investors in electronics and polyester yarn factories due to "low costs, abundance of labor and matter-of-fact permitting process."
Besides, the FDI inflows to Vietnam next months are also expected to rise after recent visits of Vietnamese leaders to South Korea, Singapore and Japan, where they met and discussed with many big companies to encourage them to continue investing in the country.
The visits have so far brought good results. After the visit to Singapore of Prime Minister Nguyen Xuan Phuc in late April, Singapore’s Sembcorp signed a memorandum of understanding with the Quang Ngai Province on the development of the Dung Quat Power Project with total investment capital of over US$2 billion.
The state visit of President Tran Dai Quang to Japan in May is also expected to open the possibility that many large projects of Japanese investors will continue to select Vietnam as an investment destination.
With the move, experts said that it is too early to say that FDI inflows into Vietnam are slowing down.
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