Attracting FDI remains a major challenge

[16 July 2014] -  State agencies are doing their best to bolster foreign investors' confidence, yet difficulties remain in attracting foreign direct investment (FDI), especially in key sectors, said Foreign Investment Agency director Do Nhat Hoang.

Registered FDI in the country totaled approximately US$6.6 billion in the first half of 2014, representing 64.7 per cent of last year's figure. Implemented FDI rose by 0.9 percent annually to $5.75 billion. But Dang Xuan Quang, the agency's deputy director, pointed out that incentives have done little to alter FDI distribution. Scant capital goes to rural areas and key sectors such as agriculture, which are in urgent need of investment; real estate draws significant investment despite the lack of incentives. Brian Portelli, an expert from the United Nations Industrial Development Organisation, said that financial incentives should only play a supplementary role in FDI attraction.



Other strategies to boost FDI included publicising information for investors on the Internet and streamlining the project verification process so that investors could begin their projects faster, said Nguyen Mai, chairman of the Viet Nam Association of FDI Enterprises. Selecting the right projects and investors was also key, economist Le Dang Doanh said, noting that authorities should not make commitments before thoroughly understanding investors' intentions and potential. Instead of offering too many incentives, he recommended that localities work harder to improve their investment climate, infrastructure and manpower quality.

 At the end of 2013, there were 9,093 FDI businesses in Viet Nam, 83 per cent of which were completely owned by foreigners, according to the General Statistics Office. These accounted for 30.5 per cent of enterprises' contributions to the State budget and 45.4 per cent of total profits. This year 31.7 per cent of FDI firms plan to increase their capital, 79 per cent expect higher revenues and 81.1 per cent hope to gain better yields, said Pham Dinh Thuy, director of the office's Industrial Statistics Department - VNS.

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