Gloomy FDI prospects cloud fast recovery

10:14′ 26/12/2009 (GMT+7)

Many FDI projects have broken ground, but whether they are completed is another story VietNamNet Bridge – Despite the recovering global economy, provincial authorities remain concerned at the dark clouds gathering over next year’s foreign direct investment horizon. A dearth of credit due to cautious banks and fundamental constraints to the country’s investment environment such as land clearance, poor infrastructure and red tape have been cited as barriers. “Foreign investors will still see difficulties in mobilising funds for developing projects,” said Huynh Van Trai, director at the Department of Planning and Investment in southern Binh Duong province, one of the country’s top recipients of foreign direct investment (FDI). Trai, however, noted that the global economy’s slow recovery was not the primary element hampering FDI disbursement in Vietnam: “The economy’s internal weaknesses like poor infrastructure, complicated administrative procedures and difficulties in site clearance are to blame,” he said. The Ministry of Planning and Investment (MPI) estimated FDI disbursement this year at $9-10 billion against the $11.5 billion recorded last year and around $10-11 billion next year. Southern Ba Ria-Vung Tau province recently asked the Ministry of Finance to provide about $324 million for site clearance, citing the slow pace of site clearance as the biggest obstacle hindering FDI disbursement. Although the registered FDI capital in Ba Ria-Vung Tau is estimated at $6.8 billion this year, the disbursement was only about $930 million. Huynh Xuan Vinh, head of Ba Ria-Vung Tau Department of Planning and Investment’s economic development and investment division, said disbursement this year largely came from projects registered before 2008. Vu Duc Quyet, director of the Bac Ninh Industrial Zone Authority, thought the reason for slow FDI disbursement was the proliferation of projects in the property sector. Over the past three years, Vietnam has attracted a lot of residential, hotel and resort projects worth billions of US dollars. Out of the country’s total FDI capital registered over the past 11 months of $19.7 billion, up to $14.6 billion was for residential, hotel and resort projects. “The disbursement at those property projects is slower than manufacturing ones, as they usually face difficulties in site clearance,” said Quyet. Quyet predicted disbursements in 2010 would reach $10 billion like 2009, not higher. Le Thanh Son, director of Hai Phong’s Department of Planning and Investment, was not upbeat about FDI disbursement either. Considered the main sea-gateway in northern Vietnam, Haiphong had attracted 302 FDI projects with registered capital of $4.2 billion as of November, 2009. Son said that disbursement of FDI projects this year and in 2010 “is not considerable”. “Many projects, especially property projects, are standing still even though we have completed site clearance,” he said. Son cited the $85 million Our City residential project, invested in by Hong Kong’s Qia Feng Vietnam Company, whose capital had not been disbursed even two years after receiving its investment certificate. The MPI’s Foreign Investment Agency (FIA) reported that full decentralisation in the context of lacking a development masterplan for industries and regions, and the weak capability of provincial government staff had allowed foreign investors to register many giant investment projects but with very low disbursements.