Tag: Vietnam

In the first eight months this year 658 new FDI projects were licensed, but they only had a combined capital of $581.8 million, according to the General Statistics Office.

They include businesses investing just a few thousand dollars.

French consultancy J&P is capitalized at $3,000, computer consultancy Streamy from Ireland at $2,600 and another French firm, Evocom, at $2,200.

These firms are “too small” to benefit Vietnam’s economy but there are no regulations prohibiting them, Su Ngoc Anh, director of the HCMC Department of Planning and Investment said.

The city chairman, Nguyen Thanh Phong, had previously expressed concern about the entry of small foreign firms.

The average capital of a foreign project in HCMC is less than $1 million, too small to have an impact, he had told a recent conference.

“Why has the city not been able to attract bigger investment? What are the obstacles?”

Lack of land

One of the obstacles is the shortage of land, Dr Dinh The Hien of the Institute of Information and Economic Research (IIB) said.

The metropolis used to attract many foreign property businesses because of its abundance of land, he said.

But investing in real estate has been difficult in recent years due to challenges in finding land and completing legal procedures, he said.

Many foreign firms want to invest in the city but then move to the neighboring provinces of Binh Duong, Dong Nai and Long An which have more available land, he said.

So attracting FDI in infrastructure and technology should be the goal of the city now, he said.

Do Nhat Hoang, head of the Foreign Investment Agency, said the high land rentals are scaring investors away from the city.

Renting land for a factory in HCMC costs about $160 per square meter per year, but five kilometers away from the city, it drops to just $50-60, he said.

But he said the city should create favorable conditions even for businesses investing $2,000-3,000 so that can develop and invest further.

Singapore allows businesses to operate with $1 capital, he pointed out.

What is of greater significance is that Vietnamese firms would improve their services and capabilities when working with these foreign businesses, he said.

Over 54 percent of 1,765 foreign businesses in Vietnam reported profits last year, the lowest since 2012, according to a survey by the Vietnam Chamber of Commerce and Industry.

Almost 38 percent reported losses, 10.4 percentage points higher than in 2012.

The government’s assessment is that eight of 12 targets assigned by the National Assembly, the national legislature, will be surpassed while the other four are achievable, the Prime Minister said in Hanoi.

The government projects that the economy will expand by more than the targeted 6.7 percent, state collections will exceed the target by 3-5 percent, inflation will stay under 4 percent and public debt will be lower than last year.

The country’s public debt will likely reach 63.92 percent of GDP, or VND3,530 trillion ($151 billion) by the end of this year, says a recent report submitted to the PM by the Ministry of Planning and Investment.

Meanwhile, the Consumer Price Index (CPI) in August is 0.45 percent up against July and 3.98 percent up against August last year, according to the General Statistics Office.

The average CPI for the first eight months was 3.52 percent higher than the same period last year.

The country posted a trade surplus of $2.8 billion in the first eight months.

During this period, the index for industrial production rose 11.2 percent, with the manufacturing-processing sector growing 13.3 percent.

Retail sales for this period is estimated at VND2.15 trillion ($92.4 million), up 11.7 percent year-on-year.

Of this total, sales of food and foodstuff increased year-on-year by 12.8 percent, garments by 12.3 percent, home appliances by 11.6 percent, cultural and educational items by 10.8 percent, and vehicles by 10.7 percent.

In June, the World Bank said Vietnam’s economy might expand by 6.8 percent this year, revising up its previous forecast of 6.5 percent in April.

The bank explained its upward revision on better prospects for the expansion of agriculture and production for exports and continued inflow of foreign direct investment thanks to bright economic prospects.

If the actual growth rate matches projections, it will be the same as last year, which was the highest in a decade, it said.

In the first quarter this year, the economy expanded 7.38 percent, also a 10-year record, thanks to strong growth in agriculture, industry-construction and service sectors.