Foreign direct investment (FDI) has surged to a record level this year but an official has said the government's licensing process will need to be more rigorous to avoid ineffectual and polluting projects.
Le Huu Quang Huy, director of the Investment Promotion Center for Central Vietnam, said Tuesday he expects the country to attract US$62 billion worth of FDI this year.
A few years ago there were few projects with an investment of more than US$1 billion, he said. But since last year Vietnam has attracted many FDI projects with a capital of several billion dollars - like the $6 billion oil refinery project in the southern province of Ba Ria - Vung Tau and a steel project worth $9.8 billion in the central Ninh Thuan Province.
Investment by foreign businesses in Vietnam in the last nine months has surpassed $57.12 billion, nearly a fivefold increase over the same period last year, according to the Foreign Investment Agency. Of this, $8.1 billion has been disbursed so far.
Huy explained the gap between the disbursed and registered amounts by saying it took time for investors to put together large sums.
Moreover, delays in handing over land for their projects slowed disbursements further, he said, noting in some cases investors had the license but not the land.
The Foreign Investment Agency has set up a number of task forces to work with local authorities nationwide to check the status of FDI projects, he said.
Investors would have their licenses revoked if they fail to start construction after acquiring land, he warned.
Huy said the Ministry of Planning and Investment had reviewed the licensing process, which some experts think is too lax and has allowed many inefficient and polluting projects to go through. Some investors have even used their projects as a cover just to secure land which they sold to pocket windfall profits, he said.
In the longer term, Vietnam should set up a "filter" to help ministries and local authorities assess FDI projects more carefully before issuing licenses, he suggested.
The Foreign Investment Agency estimated investment in industry and construction accounted for 57 percent of total FDI this year, and in agriculture, forestry and fisheries, just 3 percent.
Huy said foreign investors have been uninterested in investing in agricultural projects mainly because profits are not attractive.
Vietnam lacks large-scale agricultural production, which discourages investors, he said. The government hopes $10 billion will be disbursed this year, compared to just $4.6 billion in 2007.
With $14.8 billion, Malaysia has climbed to first place on the list of 40 countries and territories that have invested in Vietnam in the past nine months.
In second place is Taiwan with $8.6 billion, followed by Japan, Brunei and Canada.
Source: Thanhnien News