Why was registered FDI in 2007 over US$20.3 billion but only US$4 billion disbursed?

US$20.3 billion is committed capital only. After that investors need around 3 years to prepare for project implementation, site clearance, designs, etc. and at that time they inject the actual funds. It is similar in other countries and we don’t lose a dime of that registered capital.

There is another reason. Many investors registered their capital at the end of the year. I personally think that the gap between registered and disbursed capital is no problem.

However, this has been the situation for a long time and the gap between registered and disbursed capital is different each year, why?

Since Vietnam began attracting FDI, around 50% of the total committed capital of US$80 billion has been disbursed. That result is okay. However, we should take into account that some investors registered but then withdrew.

That’s their right. For example, investors registered to invest US$1 billion in a tourism project in Da Lat City several years ago but when they saw that the air route from Singapore to Da Lat had not opened, they backed out.

Investor commitments are not as strict as ODA commitments. Other countries never calculate their FDI based on committed FDI. This category is only used to evaluate investor interests, capital absorption and investment environment.

However, many are concerned about Vietnam’s lacking FDI absorption capability; they argue that investors are ready to realize their commitments but infrastructure and other conditions don’t meet their requirements. Is that the case?

That’s true. Many say that Vietnam must first develop its infrastructure facilities, land, human resources, etc. to welcome new waves of FDI into the country.

The Ministry of Planning and Investment will cooperate with provinces and cities to check projects, especially bigger ones, continue administrative reforms, work towards transparency of investment-related formalities and help investors solve their problems to quickly implement their projects.

The advantage of our workforce is we have numbers but only small minorities are trained and capable. Moreover, FDI projects are not equal dispersed throughout the country, but instead are concentrated in certain provinces and cities like HCM City, Dong Nai and Binh Duong, so the human resource shortage is particularly in these areas.

This year, the key mission will be distributing $6 billion of FDI, and policy makers are facing many challenges.

What is the specific mission of FDI attraction in 2008?

We have defined that disbursement will be the major mission of 2008. This year, the Ministry of Planning and Investment plans to draw US$15 billion of FDI, less than years before. We will center on selecting the best FDI projects for the country’s economic development.

At the same time, we will try to solve problems with solutions that better prepare our infrastructure for investors. The Government will organize special meetings to develop measures to speed up major infrastructure projects.

ODA donors also realized that to facilitate investors, they should focus their assistance into infrastructure development, especially bigger projects. For example, they pay special attention to infrastructure projects in Hanoi and HCM City, like the underground metro project.

Will FDI disbursement take precedence over other sources of capital?

The problem in 2007 was the slow disbursement of some kinds of capital, especially capital raised through Government bonds with high interest rates. The more time it takes to utilize this capital and make money back, the more waste the country suffers. I think we should only raise capital through Government bonds when we really need it.

Source: Th?i báo Kinh t? Vi?t Nam