If FDI is baromertor of efficiency, expect the country to climb up the business rankings

LookAtVietnam Bridge - Foreign direct investment capital disbursement is running much smoother this year, showing Vietnam as a good bet for long term investment, despite the economy’s recent difficulties.

Statistics from the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, show that $3.1 billion of foreign direct investment (FDI) was disbursed during the first four months of this year, an increase of 26 per cent against the same period last year.

Last year, $8 billion in FDI was disbursed, while registered capital was $21.3 billion.
During the past four months, Vietnam brought in $7.5 billion in FDI receipts, an increase of 41 per cent over the same period last year. The government is expecting to draw in $22 billion of registered capital in 2008.

“The disbursement of FDI is better than last year, proving that foreign investors still highly value Vietnam’s investment climate although our economy is going through a difficult process,” said Phan Huu Thang, head of the FIA.

Thang estimated that Vietnam would absorb about $10 billion indisbursed capital from foreign invested projects this year. The increase in FDI disbursement contributed to a boost in exports and development of the industrial and service sectors.

The FIA report shows $7.3 billion in exports for foreign invested enterprises in the first four months. These enterprises have also created 20,000 new jobs since January. Speaking at a meeting with Vice Minister of Planning and Investment Nguyen Bich Dat, Taiwan’s Compal Electronic chairman, Hsu Sheng-Hsiung, said the most attractive point for foreign investors was the government’s determination to tackle problems facing investors.

“No investor wants delays that may cause them to miss business opportunities. Everyone wants to put their projects into operation as soon as possible. The Vietnamese government knows this, and is providing increasingly favourable conditions,” Hsu said.

Last year Compal got the green-light to build a laptop-manufacturing factory in northern Vinh Phuc province valued at $500 million. The group is expected to manufacture 25 million laptops per year once it commences production in 2012. Although Vietnam is quickly becoming an attractive place for foreign investors, total disbursed investment is still modest.

Poor infrastructure, a lack of skilled labourers and cumbersome administrative procedures remain the main hindrances to business. The FIA recently announced that it will release a plan to boost the disbursement of FDI, through five key measures.

Thang said the measures would ease difficulties and create more favourable conditions for the mplementation of projects, such as simplifying bureaucratic procedures and site clearances.

(Source: VIR)