FDI floods in but disbursements more sedate
A view of the Vietnam-Singapore Industrial Park (VSIP) in Binh Duong Province. Investors have committed US$330 million to VSIR of which almost $200 million has been realized.
Foreign direct investment (FDI) in Vietnam has surged in recent years but actual disbursement remains low in some places, mainly due to delays in acquiring land.
The Ba Ria-Vung Tau Industrial Zones Authority (BIZA) recently canceled a license for a stainless steel factory after the investment failed to materialize for three years.
The US$700 million Thien Hung Stainless Steel Company was once considered an important project.
Another steel project in the province has been delayed since 2007 due to problems in acquiring land for the plant.
A Ministry of Planning and Investment official said compensation payments and actually getting possession of land are major factors for the delays in Ba Ria-Vung Tau.
The province has licensed FDI worth $11 billion this year, the highest in the country.
The figure for Ho Chi Minh City is $7 billion but only $400 million has actually been disbursed.
An official from the city Department of Planning and Investment, who wished to be unnamed, said most of the investment has been committed in real estate.
It usually takes a couple of years to acquire sites for real estates projects and as a result the pace of disbursement is slow, the official explained.
Neighboring Binh Duong Province, on the contrary, reported fairly rapid FDI disbursement.
Le Viet Dung, deputy director of the province’s Department of Planning and Investment, said the rate has been over 50 percent.
Most of the FDI projects are coming up in existing industrial parks and so investors can begin construction right away, he said.
The Vietnam-Singapore Industrial Park, for instance, has attracted 30 projects this year with a total investment of $330 million, of which almost $200 million has already been realized, Dung said.
He also cited Ecolakes My Phuoc urban town project, a joint venture between Malaysia’s Setia Group and the domestic Becamex IDC Corporation, as an example of FDI projects in the province benefiting from quick site clearance and compensation payments.
According to the Foreign Investment Agency, Vietnam received a record $45 billion FDI in the first seven months.
Of this, $6 billion has already come in, a 43 percent year-on-year rise.
Phan Huu Thang, director of the agency, said the gap between the disbursed and registered amounts is because it takes a long time for large projects to get off the ground.
The Foreign Investment Agency said its officials would travel around the country to check the status of FDI projects and help local authorities speed up work on those involving more than $50 million.
The government hopes $10 billion will actually be disbursed this year.