As Vietnam becomes choosier about investment projects, FDI decreases

17-Dec-2016 Intellasia | Vietnamnet | 6:00 AM Print This Post

The latest report by the Foreign Investment Agency (FIA) shows that only $490 million worth of foreign direct investment (FDI) was registered in November, the lowest level this year.

FIA, an arm of the Ministry of Planning and Investment (MPI), pointed out that the decrease in November followed the downward trend seen in September and October.

The report shows that 2,240 projects had got investment certificates by November 20 with the total registered capital of $13.028 billion, which is equal to 96.1 percent of the last year’s same period.

Meanwhile, investors registered 1,075 projects with additional investment capital of $5.075 billion. The figure represented a 25 percent decrease compared with the same period of 2015.

Thanh Nien quoted analysts as saying that there were two reasons behind the decrease. First, investors had delayed registration because they were following the news about the US presidential election. Second, Vietnam has become more cautious attracting FDI after incidents related to the environment.

The representative of the HCM City Industrial Zone and Export Processing Zone Management (Hepza) said on the newspaper that the FDI into the city decreased because of the municipal authorities’ policy that focuses on attracting FDI into four key industries and nine service sectors.

“HCM City does not intend to attract FDI at any cost,” the official said.

Nguyen Mai, a renowned expert on FDI, now chair of the Vietnam Foreign Invested Enterprises’ Association (VAFIE), said the prediction about the TPP cancellation was not the cause behind the FDI decrease.

He believes the major reason was the tighter control over FDI followed by local authorities after the serious environment scandals this year.

FDI to Vietnam increased sharply by 89 percent in the first half of 2016, but then decreased significantly in the second half. The mass fish deaths in the central coastal areas caused by the Taiwanese Formosa company in Vung Ang Economic Zone in Ha Tinh province in July were the major reason.

After the incidents, local authorities said they would not sacrifice or exchange the environment for more FDI.

Vo Tri Thanh, deputy head of CIEM, said on Hai Quan that the FDI decrease might continue in upcoming months, and that TPP implementation would affect the situation.

“As big questions about TPP remain unanswered, investors will have to reconsider their investment plans,” he said, adding that in the last 2-3 years, many investors, especially in textiles and garments, came to Vietnam because they hoped they would enjoy benefits from the TPP of which Vietnam is a member.


Category: Economy, Vietnam

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