FDI attraction not yet sustainable: Insider
Foreign direct investment (FDI) poured into Vietnam during the first quarter of 2021 increased compared to the same period last year despite complex developments of COVID-19, which was a relatively positive result but is not sustainable, an insider has said.
In Q1, the country attracted US$10.13 billion in FDI, up 18.5% year-on-year. Of the figure, US$4.1 billion was disbursed, rising 6.5%.
Nguyen Van Toan, Vice Chairman of the Vietnam Association of Foreign Invested Enterprises, told the Cong Thuong (Industry & Trade) newspaper that foreign investment is yet to be sustainable since growth was concentrated in March, with nearly US$5 billion registered.
He highlighted a liquefied natural gas-fuelled power plant worth US$3.1 billion invested by Singapore in the Mekong Delta province of Long An. This major project was granted an investment registration certificate on March 19, providing a strong boost to FDI inflows in March and Q1 as a whole.
In addition, most investment during the period still came from traditional partners like Singapore, the Republic of Korea, Japan, and China, while that from the US and Europe remained modest. Given this, there weren’t any breakthroughs in FDI flows during the first three months, he went on.
Considerable improvements have been recorded in FDI disbursement, Toan noted, with disbursed capital increasing each year, from US$12.5 billion in 2014 to US$20.3 billion in 2019 and then US$19.98 billion in 2020 despite the pandemic.
However, he also pointed out that total registered FDI in Vietnam has to date reached US$388.8 billion, but only US$234.36 billion or 60.2% has been disbursed. Disbursed capital in Q1 accounted for just 40% of registered investment.
It is disbursed capital, not registered capital, that shows FDI is flowing into the economy, according to Toan.
To narrow the gap between registered and disbursed capital, he suggested, the Government, ministries, sectors, and localities should adopt more effective and stronger solutions in the time ahead.