ASEAN KEY DESTINATIONS
Cost of foreign preferences outweigh benefits
FDI enterprises have made significant contributions to the country's development, but many projects in recent years have shown shortcomings.
The ministries of Finance and Planning and Investment said as of September, Viet Nam had 11,959 foreign direct investment projects, with registered capital totalling US$191.8 billion and charter capital, $61.63 billion.
A recent report of the Finance Ministry said the number of newly registered FDI projects had increased annually but implemented capital was still modest.
By September 2010, implemented capital accounted for only 32 per cent.
Many FDI projects in Viet Nam have a large amount of registered capital but charter capital is much smaller. Disbursed capital was also very low, it says.
The Ministry of Planning and Investment concurred with the Finance Ministry, citing the development of FDI afforestation projects from 1995 to August this year.
During the period, eight FDI afforestation projects were operational with total registered capital of $268 million but disbursed capital was only $22.7 million, or 8.43 per cent. Slow capital disbursement was also seen at FDI steel projects.
For example, the TATA steel production project in central Ha Tinh Province, a joint venture between Viet Nam Steel and India, has investment capital of $5 billion but its charter capital is only $50 million, or 1 percent.
From 2008-10, the FDI sector made the smallest contribution to the State Budget among the four sectors (the State-own economic sector, the FDI sector, the domestic private economic sector and the petroleum area), according to the Finance Ministry.
More FDI companies were reporting losses to Vietnamese taxation offices while they are, in fact, profitable.
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