FDI: high committed capital but low disbursement

Created 10 November 2018
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The recent research of international institutions have found problems in FDI in Vietnam: while the pledged investment capital is high, the disbursement is modest.
Tags:vietnamnet bridge, english news, Vietnam news, news Vietnam, vietnamnet news, Vietnam net news, Vietnam latest news, vn news, Vietnam breaking news, FDI, FIA, disbursement

Tags:vietnamnet bridge, english news, Vietnam news, news Vietnam, vietnamnet news, Vietnam net news, Vietnam latest news, vn news, Vietnam breaking news, FDI, FIA, disbursement

The total FDI capital registered in the first 10 months was $27.9 billion

According to the Foreign Investment Agency (FIA), the total FDI capital registered in the first 10 months of 2018 was $27.9 billion, 98.8 percent of the same period last year.

Local authorities granted investment registration certificates to 2,458 new projects with total registered capital of $15 billion. 

Meanwhile, 954 projects registered an additional amount of $6.5 billion worth of capital. Foreign investors made 5,342 deals of capital contribution to Vietnam’s enterprises, totaling $6.3 billion. 

By October 20, the disbursed capital had reached $15.1 billion, nearly 50 percent of registered capital.

The recent research of international institutions including the World Bank and Asian Development Bank (ADB) have found problems in FDI in Vietnam: while the pledged investment capital is high, the disbursement is modest .

Textiles & garments, processing & manufacturing industries, real estate and retail attract FDI the most. However, FDI flows into the real estate is not good news, economists say.

The economists also point out that while Vietnam offers too many investment incentives to foreign investors, the contribution of FDI to the national economy remains modest. 

A report by the General Statistics Office (GSO) showed that in 2016, foreign invested enterprises (FIEs) generated VND327.4 trillion worth of profit, or 45.9 percent of total profits of enterprises. 

However, the tax collections from FIEs were modest – VND250.9 trillion, lower than that of private businesses (VND434.7 trillion) and VND277.3 trillion of state owned enterprises.

Most foreign invested high-technology projects enjoy big tax incentives. As for corporate income tax, the projects are exempt from tax in the first four years, enjoy a low 10 percent tax rate in the next three years, and a 50 percent tax reduction in the next nine years.

Another problem found in FDI is the low implementation rate of registered projects. The total FDI capital committed so far has reached $333 billion. However, $150 billion worth of registered capital still has not been implemented.

In principle, only when capital is disbursed will it support the national economy; registered capital exists only on paper.

A lot of registered projects in localities still have not been implemented. These include mega projects such as the $4.1 billion Saigon Atlantis Hotel, the $4.5 billion Long Son petrochemistry project, Nhon Trach Berjaya new city project ($2 billion), international university urban area ($3.5 billion) and Kobelco ($1 billion).

Nguyen Minh Cuong from ADB also said the modest contribution by FIEs to the national economy needs more careful attention.

Meanwhile, Sebastian Eckardt from WB noted that FDI has been flowing mostly to fields which use a high number of workers or unskilled workers.

Mai Lan


Source: - Bridge

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