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3 September2009

Vietnam seeks ways to boost FDI inflow

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Vietnam’s Ministry of Planning and Investment (MPI) is searching for the best scenarios for the country’s foreign direct investments (FDI), on the back of international analysts’ predictions that a rebound could be postponed until 2011, reported.

During this process, a slow down of licenced foreign-invested projects and a growing rivalry for drawing new capital are critical concerns for economic planners.

The MPI’s FDI planners are scratching their heads over the long list of foreign-invested projects facing the axe. Also projects, each of which has billions of dollars in registered investment capital, are hitting the wall as a result of either investors’ financial inabilities or market losses due to the continued global financial crisis.

Vietnam’s biggest FDI project, the $9.8 billion Ca Na steel-making facility, is now on the rocks and the government of southern Ninh Thuan province, where the project is located, has given investors an ultimatum to get developing or get out.

Nguyen Chi Dung, chairman of Ninh Thuan People’s Committee, said it was waiting for the investors’ pledge to keep to its investment plans, otherwise the project’s investment certificate would be revoked.

The Ca Na steel-making facility, to have an annual capacity of 14 million tonnes of products, is being jointly developed by Malaysia’s Lion Group and Vietnam’s state-run Vinashin, received an investment certificate in September last year and broke ground for construction two months later. Under the joint venture’s initial development plan, the project was scheduled to finish in 2010.

Dung said Vinashin had paid 84 billion dong ($4.7 million) for site clearance while Lion Group, the 70 per cent stakeholder, had done nothing to develop the project. Figures showed that the Ca Na project alone made up a major slice of Ninh Thuan’s registered FDI, amounting to $9.99 billion from 23 licenced projects by August, 20 this year.

“The loss of such a large-scale project will be a great loss for the province. Last year, when the project was licenced, it lifted Ninh Thuan into one of the year’s best FDI locations,” said Dung. Nguyen Duc Minh, director of northern Thai Nguyen Planning and Investment Department, shared the blues since its two largest FDI projects, $147 million Nuiphaovica mining venture and the $100 million Xuong Rong Lake property complex, are now both on the edge of bankruptcy.

Meanwhile, MPI deputy minister Nguyen Bich Dat said that the list of delayed FDI projects was longer because foreign investors tended to shelve investment plans to wait for the global economy to recover.

Other significantly slowed FDI projects were the $7.9 billion Formosa steel and port complex, which hit bumps in land clearance, the $6.2 billion Nghi Son oil refinery and the $3.77 billion Long Son petrochemical complex, both of which were affected by the crisis, the $1.2 billion Thu Thiem Software Park and $550 million STX ship-building yard, whose investors were no longer capable of keeping up with the projects.

Dat admitted that with slow disbursement of licenced projects, a sharp decline in new FDI funds since the beginning of this year had caused a double-blow to FDI planners.

The MPI’s FDI reports for the first eight months of this year, released last week, indicated Vietnam’s newly registered and expanded FDI funds between January and August had fallen 82 per year-on-year, to stay around $10.4 billion.

According to MPI reports, the nation’s new FDI fund had recently decreased on a monthly basis, with newly registered capital of $2.2 billion in June down to $1.7 billion in July and just $300 million in August.


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