Posted on 12 Jan 2009
Global crisis to lower FDI by two-thirds
Foreign direct investment (FDI) into Vietnam could plummet to some US$20 billion this year from $64 billion last year due to the global financial crisis, investment officials said yesterday.
Nguyen Mai, former vice chairman of the State Commission on Cooperation and Investment said at a conference in Hanoi, economic recession in some developed countries could be a direct factor in the reduction of investment flows, because many corporations will suffer losses.
The corporations will have to restructure, close some of their factories, and cut employees and limit their new investment, he said
In addition, they may adjust their investment strategies, narrow their investment areas, and put off projects that cannot access bank loans, Mai said.
However, Vietnam can still be optimistic about FDI disbursement this year, conference delegates said.
According to Phan Huu Thang, head of the Ministry of Planning and Investment’s Foreign Investment Agency, FDI disbursement could be $11-12 billion in 2009 compared with $11.5 billion in 2008.
Vietnam has major advantages in terms of political and economic stability, improved infrastructure, legal framework and labor force, and the government’s support for foreign investors, he said.
“Prospects for medium-and long-term investment projects in Vietnam is still assessed to be high,” Thang noted, adding that investors will continue to pour investment into refinery, chemical, oil, and mining projects, as well as into real estate development in Hanoi and Ho Chi Minh City.
To cope with difficulties caused by falling FDI inflows, Vietnamese need to seek new investment partners, Mai said, noting that many investors from the Middle East have shown interest in doing business in Vietnam.
The government should facilitate investors, improve its market forecasting capacity, and intensify surveillance over effectiveness of investment projects, he said.
Claudio Dordi, head of the team of advisors for the EU -Vietnam Mutrap III project, said Vietnam should pay more attention to improving its legal framework and increasing the role of the private sector in economic development.
To date, Vietnam has had 10,500 operational foreign-invested projects with a registered capital of $155 billion from over 70 countries and territories. Foreign-invested companies accounted for 40 percent of Vietnam’s total exports, and contributed to 28 percent of the country’s gross domestic product (GDP) in 2008.
Vietnam posted an economic growth rate of 6.25 percent in 2008, compared with 8.48 percent in 2007.
