Ministry seeks ways to stem FDI decline
Ministry seeks ways to stem FDI decline
The Ministry of Planning and Investment is seeking effective measures to prevent the decline of direct foreign investment (FDI) in the country, according to a report in Dau Tu (Investment) newspaper.
Viet Nam attracted US$10.49 billion of FDI by the end of October this year, accounting for only 75.3 per cent compared with the same period last year.
Of the total, 881 newly licensed projects had registered $6.68 billion, a year-on-year decrease of 36.7 per cent, and 359 on-going projects expanded their investment capital of $3.8 billion, a year-on-year increase of 12.3 per cent.
Do Nhat Hoang, director of the Foreign Investment Agency, said the country's FDI inflow continued to drop in recent years. He urged the government and authorised agencies to have effective and timely measures to stop it.
In 2008, Viet Nam attracted a record number of FDI with $71.7 billion, but it fell sharply to only $23 billion in 2009 and $20 billion in 2010, and $15.6 billion in 2011.
"This year, the investment ministry estimates that it will be very difficult to reach $15 billion in FDI," Hoang was quoted by Dau Tu as saying. He said "there were only two months left before the year-end and it was not easy to attract an additional $5 billion."
Dao Quang Thu, deputy minister of Planning and Investment, also admitted that registered capital of FDI enterprises, particularly from South Korea and Taiwan, had decreased significantly.
A representative of the Dong Nai Province's Management Board of Industrial Parks said that in recent years FDI inflow from Taiwanese enterprises had dropped by 10 times, with only $20 million injected into the province in the last 10 months.
Viet Nam is no longer the top-ranking destination of Korean investors, having been replaced by Indonesia and Myanmar, according to Nguyen Minh Hien, investment counsellor in South Korea.
Nguyen Van Ba, an official in charge of investment at the Vietnamese consulate general in Osaka, Japan, said Viet Nam was not the only "beautiful girl" in the region so it would have to compete with Indonesia, Thailand and Myanmar.
Deputy Minister Thu expressed concerns about the country's FDI decrease at time when the State budget and government bonds had become more and more limited.
"We need to have new measures soon to gain investors' trust," Thu said.
The investment ministry has proposed several measures related to areas such as investment promotion, investment preference mechanism and investment management in order to attract more FDI inflow and use FDI effectively.
However, representatives of provinces have proposed measures that should be implemented immediately, in addition to the ministry's long-term measures.
The Dong Nai Investment Board of Industrial Parks suggested simplifying investment procedures in ways that could cut the time needed for ministries to verify FDI projects from 30-40 days to 15 days.
Current regulations on tax preferences for FDI enterprises should be reconsidered to encourage investors to expand their projects.
At present, expanded FDI projects do not receive tax preferences, according to the office.
Regarding this issue, Vu Dai Thang, director of the Economic Zone Management Department, also agreed that to stop the FDI decline, it was imperative to adjust policies related to investment preferences and intensify investments in developing soft and hard infrastructure.
Soft infrastructure refers to human capital and institutions that cultivate it, such as community colleges and universities.
"Since 2008, Viet Nam's investment preferences have decreased significantly. Investments in local industrial parks were not given preferences, so this led to a decrease in FDI," Thang said.
Reforming administrative procedures, particularly those related to land clearance, to reduce overlaps and contradictions among current legal regulations was mentioned by Lu Thanh Phong, deputy director of the HCM City Planning and Investment Department.
"We have asked FDI investors to fulfil statistical forms but these forms are too complicated, disheartening investors," Phong said.
The Binh Duong Province's Management Board of Industrial Parks proposed to adjust procedures related to taxation, customs and licensing for foreign workers in order to offer better care for investors.
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