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February 16, 2009

Vietnam: Global slump seen denting FDI inflow

Pledges of foreign direct investment (FDI) in Vietnam may drop to $20 billion this year, less than a third of last year's record $64 billion, due to the global economic slump, an online newspaper quoted a state planner as saying.

"New foreign investment will fall this year but that does not mean our investment environment has worsened," the VietnamNet ( newspaper quoted Phan Huu Thang, head of the Foreign Investment Agency (FIA), as saying.

Nearly $24 billion of the $64 billion pledged last year was for real-estate development projects, the FIA has said.

"We believe there are investors that are not seriously affected by the crisis and we need to refocus to tap these sources," Thang said, adding the agency would step up efforts to lure investors from the Middle East alongside traditional partners in East Asia and Singapore.

He also said Prime Minister Nguyen Tan Dung had set a target of keeping the flow of foreign direct investment into Vietnam in 2009 at least at the same level as 2008 at $11.5 billion.

Earlier this month Thang projected FDI disbursements would fall up to 13 percent compared with 2008 to $10-11 billion.

Vietnam's gross domestic product growth slipped to 6.23 percent last year compared with 8.5 percent the year before. Many economists forecast growth of around 5 percent this year, although the government is aiming for 6-6.5 percent.

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