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 suddenly 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 neat for licensed projects were stagnant in the stern 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 pledge 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 focus on capital to reform their domestic enterprises seriously impact on Vietnamese economy.This phenomenon is most apparent in young 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 emblem is encouraging in the context of global economic and domestic difficulties. The amount of registered capital ontogenesisd by $ 3. 1 billion, 1. 65 times the registered capital increase in 2010 (1. 89 billion U SD). 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 FDI dining table 1 Number of projects Total registered capital( MilImplementation 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 P rel. 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 cut 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 amusement 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 segmentation 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 volume of FDI inflows were in oil and mining sector, by the end of the last century and early this century, light and heavy industry sectors dominate the field. Further, while FDI in market-gardening were marginal in the 1990s, now this sector account for a significant share in the total FDI both in t erms 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 voice 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 piddle 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 Minh city and its skirt 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 reg ions.This physical body 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 Singapore 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 Islands 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 spend 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 Vietn am 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/