The FDI to Vietnam reached its peak in 2008, when Vietnam attracted a record high registered capital of 71.7 billion dollars. In 2009, the FDI flow dropped sharply to 23 billion dollars, just equal to 30 percent of that in the previous year.

The downward trend continued when the registered FDI capital reduced to 20 billion dollars in 2010 and then to 15.6 billion dollars in 2011. Meanwhile, Do Nhat Hoang, Head of the Foreign Investment Agency, has warned that the FDI registered capital would not reach 15 billion dollars in 2012.

A report has shown that only 10.49 billion dollars worth of FDI projects have been registered over the last 10 months, which is just equal to 75.3 percent of the same period of the last year.

“We have only two months ahead, which is not enough for us to attract five billion dollars more to obtain the targeted level of 15 billion dollars,” Hoang said.

Especially, the number of big scaled FDI projects with the investment capital of billions of dollars has decreased significantly. The Tokyu urban area project in the southern province of Binh Duong, capitalized at 1.2 billion dollars is the only huge project so far this year.

Deputy Minister of Planning and Investment Dao Quang Thu, while emphasizing that in the new period, Vietnam does not strive to attract FDI at any cost, but it pays more attention to the investment quality, has admitted that the FDI decrease is a big problem.

“The registered capital has decreased sharply, especially from South Korea and Taiwan. We need to take actions to restore investors’ confidence,” Thu said, adding that the capital for investment and development, including from the state budget and government bonds has become exhausted.

The representative from the Dong Nai provincial Board of Industrial Zones has confirmed that in recent years, the FDI from Taiwan has dropped by 10 times. Only 20 million dollars worth of Taiwanese invested projects have been registered in the province so far this year.

Meanwhile, Nguyen Minh Hien from the Vietnamese Embassy in the Republic of Korea said Vietnam is no more the top choice for South Korean investors, because Indonesia and Myanmar have gained the positions.

Nguyen Van Ba, the Vietnamese investment representative in Osaka, Japan, said that Vietnam has to compete with other potential destinations in the region to attract Japanese investment.

The Dong Nai provincial Board of Management of Industrial Zones has vowed to simplify the administrative procedures. An official of the management board said central agencies and ministries need to shorten the process of examining projects.

“It’s necessary to shorten the process to 15 days from 30-45 days,” he said.

The official has also suggested reconsidering the tax incentives, saying that a lot of investors try to haggle with local authorities that they would only expand the investment scale if they can enjoy investment incentives. Meanwhile, under the current regulations, the expanding projects would not be granted tax incentives.

Vu Dai Thang, a senior official of MPI, has agreed that in order to stop the FDI decline, Vietnam should amend the policies on investment incentives before considering the amendment of the legal framework and makes heavier investment in infrastructure development.

By Thu Uyen - VietNamNet Bridge - November 2, 2012