Added capital by FIEs exceeds fresh FDI funds

CA - Operational foreign-invested enterprises (FIEs) have increased capital in Vietnam by more than the FDI amount pledged this month, according to the Foreign Investment Agency under the Ministry of Planning and Investment.

A total of 57 operational foreign-invested projects added $420 million in all to their investment capital in October this year, according to the agency. The added sum is more than double compared with investment in fresh projects this month. This is the first month this year in which FIEs have increased their capital higher than fresh investment projects.

Foreign direct investment (FDI) capital pledged for the month was $184 million for 39 projects.

Experts said many FIEs have been operating at a profit and decided to raise capital to fund expansion schemes. The investors also have faith in the country’s investment environment.

During the ten-month period, the nation attracted nearly S$11.6 billion in 759 newly registered projects, down 28.8 percent in terms of value, equalling a 19.1 percent decline in project numbers year-on-year. Another additional $1.2 billion went to 210 existing projects.

In total, FDI of both newly registered and additional capital for existing projects for the past 10 months was $12.79 billion, down 41.9 percent against the same period last year, and far below the annual target of $22-25 billion.

The Netherlands was the leading source of foreign investment in the country, registering more than $2.2 billion, followed by South Korea with more than $2.1 billion and the US with more than $1.9 billion.

The processing and manufacturing sector attracted the lion’s share of FDI, gobbling up more than $4 billion over a 10 month period. Production, electricity and water distribution, air-conditioning contributed over $2.9 billion, while the real estate sector ranked third in FDI attraction, hitting $2.85 billion.

However, disbursement of foreign direct investment (FDI) in the first 10 months was marginally up 7.1 percent against the same period last year to reach $9 billion, according to the agency.

Experts said that FDI disbursement in the year to date “is a good signal for Vietnam’s investment environment” although the local economy is facing problems due to inflation. Foreign investors see the investment environment improving, so many of them have expanded operations, they said.

Given the result in the first 10 months, Vietnam’s target of $10 to $11 billion of FDI disbursed this year is obtainable, they said.

Experts said the higher target this year can come true because many investors of newly-licensed projects want to deploy their projects soon.

Last year, Vietnam attracted $21.4 billion of registered FDI capital, but the disbursed capital was only $10 billion.