Till the end of 2008, 20 years after Law on Foreign Investment took effect, 81 countries and territories had invested in Vietnam. Between 1988 and 2008, the country had over 9,500 foreign invested projects being licensed with total registered capital of nearly $100 billion.
Except for few projects that ended operation and underwent liquidation prematurely, as of now 8,600 projects remain operational with total committed capital of over $83 billion (excluding the registered FDI capital of 2009).
As pf early to 2009, over 4,100 FDI projects increased in capital size with extra amount of nearly $19 billion, showing that Vietnam's investment environment is getting more attractive and efficient.
From 1988 to 1990, average registered FDI capital for each project was $7.5 million that was raised to $12.3 million in 1996-2000, and then $3.5 million/project in 2001-2005 with many small and medium sized projects.
Since 2006, many multi national groups hiked the average investment capital for each FDI project to $14.5 million, which inflected the financial strength as well as attention of foreign investors to Vietnam's investment market.
During the past 20 years, FDI has become one of important capital sources for Vietnam's investment and development. In addition, foreign invested projects contributed much to the country's GDP, particularly 6 percent in 1991-1995, 14.6 percent in 2001-2005 and over 17 percent in 2006-2008.
However, FDI projects mainly are centralised in mineral mining, petroleum, steel and real estate. These are environmentally harmful sectors and require large construction area. Much investment in real estate projects caused difficulties for Vietnam's balanced import export because large area of agriculture fields was filled up and many farmers were unemployed. A lot of projects, such as Vedan and Miwon, are reportedly destroying rivers.
Furthermore, a series of licensed FDI projects namely golf course, resort and high class tourism site projects are not matched with the sustainable development plan while only few FDI projects are invested in forestry and agriculture. Many FDI projects had to be revoked because investors lacked financial capacity. Meanwhile, some foreign investors pushed Vietnamese partners out from joint ventures to become 100 percent wholly foreign invested firms. In fact, the partnership between FIEs and Vietnamese firms has not really brought in efficiency.
Pham Thanh Ha-Doctor from National Academy of Politics and Public Administration Region 1 says, “We could not swap FDI by all prices. Vietnam should not be over-excited with achieved records in FDI attraction. The more importance is how to disburse such a huge capital volume effectively”.
He said that the factors such as cheap labour cost, plentiful natural resources, and large domestic market are very significant to attract foreign investment but this could not ensure the sustainability of high quality foreign investment in long term.
Thanks to two FDI projects including Dragon Beach Resort worth of $4.15 billion in Dien Ban, Quang Nam province and Nhon Trach New City Project of $2 billion, which were licensed in September 2009, Vietnam's FDI attraction last year hit $20 billion.
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