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Submitted by ctv_en_6 on Sun, 04/22/2007 - 13:40
Unprecedentedly, many of the world’s big groups and companies poured investment into Vietnam during late 2006, according to Vu Tien Loc, chairman of the Chamber of Commerce and Industry (VCCI). This demonstrates the great attraction of Vietnam for foreign investors.

At the APEC Chief Executive Officers (CEO) meeting which was held during the APEC Summit in Hanoi late last year, only a few contracts were signed, but the appearance of international general directors and chief executive officers of big groups in Vietnam was considered a “launching platform” to attract new investment from the EU, Japan and other markets into Vietnam in 2007 and in the future.


Foreign investors are paying attention to big projects in Vietnam such as the building of Nghi Son oil refinery factory in Thanh Hoa province, Van Phong economic zone in Khanh Hoa, Thach Khe steel production factory in Ha Tinh, Mong Duong electric power plant, bauxite production in Lam Dong and the northern An Khanh new urban area in Ha Tay. Many other projects regarding gas, electricity and oil exploitation and processing, as well as shipbuilding are currently undergoing.


However, in 2007 Vietnam faces a number of difficulties and challenges as import tax will be cut from the current 17.4 percent to 13.4 percent in the next 3-4 years. Competition among countries in attracting foreign investment will become fiercer. Furthermore, many foreign investors who are doing business in Vietnam are taking into account Vietnam’s benefits as a WTO member that will become reality in the next 3-5 years according to WTO commitment roadmaps. Impending pressures that they will have to suffer are increases in production costs, particularly fuel prices such as electricity and coal will rise significantly according to the Government’s plans. Costs for salaries will also go up when the minimum salary in foreign-invested enterprises rises.


According to head of Foreign Investment Department of the Ministry of Planning and Investment, Phan Huu Thang, the greatest hindrance to FDI attraction plans lies in poor infrastructure and cumbersome administration reform, which has not met demands.


Mr Thang said if the current shortage of electricity is not resolved, business and production will be badly affected and new investors won’t feel secure enough to do business in Vietnam. Similarly, rapid economic growth also leads to the overloading of transport, seaport, telecommunications and water supply systems, M Thang warned.


Although a lot of work has to be done to improve investment environment and administration reform, based on achievements in FDI attraction in recent years and in the first quarter of this year, Ministry of Planning and Investment forecast that FDI will reach US$4.5 billion in 2007, a year-on-year increase of 10 percent. Of the figure, industrial and construction sectors will account for 60 percent, agriculture, forestry and fisheries sectors will make up 4.5 percent and services, 35.5 percent. FDI businesses will yield a turnover of US$35.25 billion, up around 17.5 percent compared to 2006 and exports are expected to net US$18 billion (excluding crude oil), up 20 percent. FDI businesses will generate around 300,000 jobs, bringing the total number of labourers in the FDI sector to 1.55 million.

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