Vietnam News Network

Vietnam News: Local, National, Business, Sport, Entertainment and Technology

Trade BTCUSD, Bitcoin and Cryptocurrencies

BUY & SELL BTCUSD | View BTCUSD News & Updates

Buy Sell BTCUSD, Bitcoin and Cryptocurrencies

FDI – implemented and registered figures   2008-12-11 - Viet Nam Net

By early November 2008, registered foreign direct investment (FDI) in Vietnam had hit $61 billion. According to the Foreign Investment Agency under the Ministry of Planning and Investment, the figure may reach $65 billion for the whole year. However, FDI forecast for 2009 is merely $30 billion.




Will the FDI in Vietnam in 2009 fall due to the world economic slowdown, Vietnam being less attractive, or Vietnam refusing FDI projects?


First of all, it has to be remembered that Vietnam’s conception of FDI is different from the rest of the world’s. While Vietnam talks about registered and implemented FDI, the world prefers realised FDI.


Registered FDI is the total FDI registered in investment licences, including equity capital and credits. Equity capital includes foreign capital and capital contributed by domestic partners. Credits include loans from foreign and local banks.


Implemented FDI is the implemented capital, comprising foreign and local capital. The registered and implemented FDI is compiled by the Ministry of Planning and Investment.


Realised FDI is the real flow of foreign capital invested in Vietnam and it is shown in the international balance of payment. This figure doesn’t include capital of local partners or local banks. This figure is prepared by the State Bank of Vietnam (SBV).


To see the differences that these three different measurements can produce, let’s make a comparison: In 2005, Vietnam announced registered FDI of $6.8 billion and implemented FDI of $3.3 billion. However, statistics of the Association of Southeast Asian Nations (ASEAN) showed that FDI in Vietnam was only $2.36 billion. Three different numbers that reveal three quite different views about FDI.


According to the 2005 statistics of the ASEAN, Vietnam accounted for 15% of the total population of the ten ASEAN countries but it made up just 4.5% of the total FDI flow into the region (the figure is realised FDI, not registered FDI).


High numbers favoured


According to the Foreign Investment Agency, the gap between registered FDI and implemented FDI is increasing. It is similar for the gap between implemented and realised FDI. The rate of local capital is increasing, with many FDI projects based on capital contributed by state corporation and credits from local banks.


It is clear that local capital and local credits, which are not foreign capital, are added to FDI statistics. It is quite easy to understand this add-on. To all agencies from management bodies to investment promotion agencies and local governments, high numbers mean great achievement and pride in the attractiveness of the investment environment.


Investors also benefit from high figures. It is easier for real estate projects with a lot of capital to be granted larger land plots. When real estate prices in Vietnam were at the highest level in the world, the land area allocated to investors became an attractive “option”. If real estate prices climb highly, investors will implement their projects. If the prices are low and they can’t raise capital, they will allow their land to be revoked without paying any expenditures.


When capital raising is difficult, investors of big projects can easily ask for extensions for implementing their projects. And land, thus, is still hold.


Therefore, the number of real estate projects has suddenly increased. In the January-October period of 2008, real estate projects had registered capital of more than $22 billion, compared to nearly $19 billion in the 1998-2007 period.


Investment in processing industry drops


Registered FDI in real estate, heavy industry (steel, oil and gas) projects is increasing highly. These are projects that don’t create many jobs. Meanwhile, FDI in processing, labour-intensive projects (light industry, food processing, agro-forestry-fishery projects) is falling.


Is the attractiveness of Vietnam’s labour cost down or the attractiveness of real estate and heavy industry up?


In any case, the registered FDI figure is not meaningful in making policies. Especially, in the global financial crisis, it is more difficult for big projects to get access to capital sources and more easily for them to be cancelled

Other news

Lawyers: ACB illegally accessed investor’s account   2008-12-11

Crude oil price falling, lubrication oil rising   2008-12-11

Fuel prices cut again, import tax hits ceiling   2008-12-11

Tan Tao seeks contractors for $7.7 bln power plant   2008-12-11

Stocks enter ‘final phase’ of bear market   2008-12-11

Thais hope to win over Vietnamese tourists   2008-12-11

Retail fuel prices to follow world prices: importers   2008-12-11

Steel consumption may fall by 14 percent this year   2008-12-11

US pizza, restaurant chains to promote franchises in Vietnam   2008-12-11

BUSINESS IN BRIEF 11/12   2008-12-11

Jetstar says will service more domestic flights for Tet   2008-12-11

Provincial Competitiveness Index 2008: Da Nang ranks first   2008-12-11

Vietnamese textile exporters advised to improve quality   2008-12-11

Bank interest rates going down, bonds becoming more attractive   2008-12-11