The Situation of Fdi in Vietnam

The situation of FDI in Vietnam Inflow of FDI In 1987, Vietnam for the first time issued its ever first Law of FDI. Despite its relative short history, Vietnam has managed to attract a substantial amount of FDI. In relative term, Vietnam has been quite successful as compared with other countries, ranking the third recipient in the ASEAN [pic] Firgure 1: FDI Inflow into Vietnam during 2000-2010 (source GSO) Figure 1 shows the overall trend of FDI inflows in Vietnam for period 2000-2010.Together with the number of investment projects, the amount of registered capital for licensed projects were stagnant in the fourth first years of 20th century which is generally referred to as the circumstance of World Crisis period in Vietnam. Beginning the year2004, the amount of registered capital had a sign of developing and the registered capital peaked in the 2008 and dropped sharply subsequently when many multinational companies did not want to share their limited little capital as well as to fo cus on capital to reform their domestic enterprises seriously impact on Vietnamese economy.This phenomenon is most apparent in late 2008 and early 2009. Also, due to the influence of the financial crisis and the contraction of the credit markets, transnational companies are affected more or less. In 2008, merger and acquisition plans of transnational companies has declined 35%, down sharply from 2008. According to recently released statistics report of the Foreign Investment Agency also said that the implementation of FDI capital in 2011 is estimated at $ 11 billion, with the implementation of 2010 and contributed 25. 9% of the total investment of the whole society.Do not complete the plan (the plan is $ 11. 5 billion). Although only 74% compared to 2010, but this figure is encouraging in the context of global economic and domestic difficulties. The amount of registered capital increased by $ 3. 1 billion, 1. 65 times the registered capital increase in 2010 (1. 89 billion USD). This shows that foreign investors remain positive reviews about business and investment environment in Vietnam. FDI made in 2011 is estimated at $ 11 billion, equivalent to 2010 and contributed 25. 9% of the total investment of the whole society. 2. 2 Sectoral distribution of FDITable 1 | |Number of projects |Total registered capital( Mil|Implementation capital (Mil| | | |USD) |USD) | |Total |14998 |229913. 7 |88945. 5 | |1988 |37 |341. 7 | | |1989 |67 |525. | | |1990 |107 |735. 0 | | |1991 |152 |1291. 5 |328. 8 | |1992 |196 |2208. 5 |574. 9 | |1993 |274 |3037. 4 |1017. | |1994 |372 |4188. 4 |2040. 6 | |1995 |415 |6937. 2 |2556. 0 | |1996 |372 |10164. 1 |2714. 0 | |1997 |349 |5590. 7 |3115. 0 | |1998 |285 |5099. |2367. 4 | |1999 |327 |2565. 4 |2334. 9 | |2000 |391 |2838. 9 |2413. 5 | |2001 |555 |3142. 8 |2450. 5 | |2002 |808 |2998. 8 |2591. | |2003 |791 |3191. 2 |2650. 0 | |2004 |811 |4547. 6 |2852. 5 | |2005 |970 |6839. 8 |3308. 8 | |2006 |987 |12004. 0 |4100. 1 | |2007 |1544 |21347. | 8030. 0 | |2008 |1557 |71726. 0 |11500. 0 | |2009 |1208 |23107. 3 |10000. 0 | |2010 |1237 |19886. 1 |11000. 0 | |Prel. 2011 |1186 |15598. 1 |11000. 0 | Table 2 | Number of | Total registered capital( | | |projects |Mil USD) | |TOTAL |13440 |199078. 9 | |Agriculture, forestry and fishing |495 |3264. 5 | |Mining and quarrying |71 |3015. | |Manufacturing |7661 |94675. 8 | |Electricity, gas, stream and air conditioning supply |72 |7391. 6 | |Water supply, sewerage, waste management and remediation |27 |2401. 9 | |activities | | | |Construction |852 |10324. | |Wholesale and retail trade; Repair of motor vehicles and |690 |2119. 1 | |motorcycles | | | |Transporation and storage |321 |3256. 8 | |Accommodation and food service activities |319 |10523. 3 | |Information and communication |736 |5709. | |Fiancial, banking and insurance activities |75 |1321. 6 | |Real estate activities |377 |48155. 9 | |Professional, scientific and technical activities |1162 |976. 1 | |Administrative and support service activities |107 |188. 0 | |Education and trainning |154 |359. | |Human health and social work activities |76 |1081. 9 | |Arts, entertainment and recreation |131 |3602. 6 | |Other activities |114 |711. 5 | | | Table1 shows the total of foreign direct investment in each year from 1988 to early 2011 by the number of projects, the amount of registered capital and the amount of implemented capital for period 1988-2011.Table 2 gives further detailed breakdown by subsectors and by time period. As can be seen in the Table 1, the majorities of FDI inflows in Vietnam are into manufacturing in terms of the number of project register capital and implemented capital as well. Table 1, with its detailed breakdown by smaller economic sectors and by time period provides a much richer picture of the trend of FDI into Vietnam. First, within the manufacturing, while during the early part of 1990s, the majority of FDI inflows were in oil and mining sector, by the end of the last century and earl y this century, light and heavy industry sectors dominate the field. Further, while FDI in agriculture were marginal in the 1990s, now this sector account for a significant share in the total FDI both in terms of the number of projects and registered/implemented capital In the service sector, while getting smaller in relative terms, the hotel and tourism sector still remain significant. An important point is that is that in the early history of FDI, there was no FDI in many important service sectors such the construction of industrial zones, office, apartment, now these sectors start attracting significant portion of FDI inflows. 3. . Regional distribution of FDI [pic] According to official statistics by the Government Statistical Office (GSO) and the Ministry of Planning and Investment (MPI), all sixty four provinces in Vietnam have received FDI. However, the distributions of FDI across provinces are very much uneven. As shown in Figure 3, the South East region (covering Ho Chi Min h city and its surrounding provinces account for the largest share of FDI. In the North, Hanoi and neighboring provinces account for the send largest share of FDI, leaving a very small proportion for other regions.This pattern is due to the fact that Hanoi and Ho Chi Minh city are the two main economic hubs of the country. The concentration of FDI in Hanoi and Ho Chi Minh has been attributed to the increased cost of living and doing business in the two cities. This has led to a tendency that foreign investors are looking elsewhere for the investment location. In addition, the local governments in these provinces have now realized the importance of FDI and are actively attracting inward FDI in their respective regions/provinces. 2. 4 Country of origin Table 3 |Number of Projects | |Total registered | | | | | |capital ( Mil USD) | | |TOTAL |13440 | |199078. 9 | | |Of which | | | | | |Japan |1555 | |24381. | | |Korea Rep. of |2960 | |23695. 9 | | |Taiwan |2223 | |23638. 5 | | |Singapor e |1008 | |22960. 2 | | |British Virgin Islands |503 | |15456. 0 | | |Hong Kong SAR (China) |658 | |11311. | | |Malaysia |398 | |11074. 7 | | |United States |609 | |10431. 6 | | |Cayman Islands |53 | |7501. 8 | | |Thailand |274 | |5853. 3 | | |Netherlands |160 | |5817. | | |Brunei |123 | |4844. 1 | | |Canada |114 | |4666. 2 | | |China, PR |833 | |4338. 4 | | |France |343 | |3020. 5 | | |Samoa |90 | |2989. | | |United Kingdom |152 | |2678. 2 | | |Cyprus |11 | |2357. 9 | | |Switzerland |87 | |1994. 6 | | |Luxembourg |22 | |1498. 8 | | |Australia |261 | |1316. | | |British West Indies |6 | |987. 0 | | |Fed. Russian |77 | |919. 1 | | |F. R Germany |177 | |900. 2 | | |Denmark |92 | |621. 5 | | |Finland |7 | |335. | | |The Philippines |61 | |302. 3 | | |India |61 | |233. 8 | | |Mauritius |34 | |229. 2 | | |Indonesia |30 | |219. 7 | | |Bermuda |5 | |211. | | |Italy |40 | |191. 9 | | |Slovakia |4 | |147. 9 | | |Cook Islands |3 | |142. 0 | | |United Arab Emirates |4 | |128. 4 | | |Chanel Isl ands |15 | |114. | | |Bahama |3 | |108. 6 | | |Belgium |40 | |106. 7 | | |Norway |28 | |102. 4 | | | Poland |9 | |98. 7 | | |New Zealand |18 | |76. | | |Sweden |28 | |71. 7 | | Table 3 documents the distribution of FDI by investors in Vietnam. The top ten foreign investors account for around 80 percent of the total investment in terms of the number of projects, the total investment capital and the registered capital. As can be seen in the Table, the inward FDI in Vietnam was and still is dominated by regional investors. Investors from the Asian region account for 67 percent.Although, the US is a late comer to Vietnam, the inward investment inflow has increased significantly since 2001 after the conclusion of the Bilateral Trade Agreement (Parker et al 2005). For the European investors as a whole, the number of projects account for only about 10 percent, the total investment capital 15 percent and the register capital 20 percent. References : http://www. gso. gov. vn/default_en. aspx ? tabid=491 www. gso. gov. vn/default_en. aspx? tabid=491 https://www. google. com. vn/