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Books on Vietnam
REPUBLICAN REFERENCE
Area (sq.km)
329,560
Population
79,939,000
Capital
Hanoi
Currency
dong
President
Tran Duc Luong
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Update No: 038 - (01/02/05)
Vietnam's economic development
targets are putting high pressure on individual industries to diversify their
capitalisation channels, which more focus on the FDI source.
The country attracted nearly US$4.2 billion in foreign direct investment (FDI)
capital in 2004, a level not reached since the Asian economic crisis stalled the
economy's growth in the late 1990s.
The figure was 34.3 per cent higher than 2003's result and well beyond the
government's target of US$3.3 billion for the year. That number could rise even
higher as year-end deals trickle in, as many local authorities have not provided
the latest updated figures of projects approved in the last few weeks of the
year. This year, Vietnam has witnessed the most obvious recovery trend in FDI
inflow into Vietnam since the regional crisis. This is not an abrupt and
accidental rise. The main cause lies in the country's efforts, which have been
very much improved.
The FDI rise saw parallel increases in actualised investment capital, which is
expected to reach US$2.9 billion, up 8 per cent from 2003, along with increases
in the number of enterprises that have applied to supplement their capital and
expand their operations. The massive supplementation of investment capital by
operating projects represents their increasingly efficient operations. Strong
confidence in Vietnam's business environment is an evidence of the improvement.
Japanese businesses in a survey ranked Vietnam fourth in the world in terms of
competitiveness after China, the US and Thailand, while 76 per cent of Korean
enterprises present in Vietnam wanted to expand their operations.
Minister of Planning and Investment, Vo Hong Phuc forecasted that FDI inflow
would continue to flourish in 2005, given the favourable conditions of the
domestic and global economies.
Internationally, FDI inflow reversed its downturn trend in 2004, reaching US$760
billion globally after dropping to US$570 billion in 2003 from US$1.27 trillion
in 2001. Foreign FDI experts predicted that the upward trend would continue into
2008. In addition, economies that have recovered since 2004 are expected to
build on their momentum, promising expanded markets for Vietnamese enterprises.
Domestically, Vietnam makes many efforts to move steadily toward adapting its
investment environment to international standards.
In January, Vietnam is reported to have attracted nearly US$1 billion in FDI,
kicking off a good year for flourishing FDI inflow.
The projects include a US$656 million mobile telecommunications project, which
was tabled for the government late last December and a US$115 million multi-storey
complex that was given in-principle approval by Prime Minister Phan Van Khai.
Many other projects are worth more than US$10 million each.
However, the country recognises that it should encourage a substantial rise of
direct investment from America and European Union investors by opening up key
sectors including banking, financial services and telecommunications. The top
ten foreign investors in terms of disbursed capital in Vietnam for 2004 did not
include the United States or many European Unions (EU) countries, which comprise
25 strong economies.
By the end of last year, the US ranked as the 11th largest foreign investor in
Vietnam with 215 projects with a total disbursed capital of US$730 million. The
United Kingdom followed with 62 projects and US$600 million in capital
disbursement, with France and the Netherlands, the only two EU countries in the
top 10.
In order not to heavily rely on overseas development assistance, Vietnam is
increasingly aware of the fact that it needs to attract a more significant FDI
inflow from the US and EU by opening up new industries and sectors to investors.
In an official speech of the Prime Minister Phan Van Khai in January, besides
calling foreign investors to come to Vietnam, citing that they have contributed
a significant role in rebuilding the country, Khai also called for greater
efforts from all quarters to bolster the economic growth rate this year.
The year 2005 will play a decisive role in realising the goals of the five-year
plan (2001-2005). Therefore, the GDP growth rate of this year must be at least
8.5 per cent.
Khai ordered ministries and state agencies to seek measures to boost industries,
services, agricultural products and exports and cut costs to enhance the
competitiveness of Vietnamese goods. He urged his cabinet to make major changes
to improve the efficiency of state administration, minimise red tape, curb
corruption, prevent waste and losses in state-funded construction works. He
agreed that the country needed to step up these reforms and fight against
corruption, harassment and red tape to ensure transparency at state agencies and
intensify supervision of their activities.
Public complaints are mostly related to land-use right certificates,
construction permits, land clearance for government's projects. Complaints
piling up, waiting to be settled, just creating heavy pressures for the
government.
Khai paid much attention to preventing wastefulness and wrong allocation of
state budgets as well as fighting against wrong-doers and corrupt officials.
The government is currently very concerned about avian flu which risks to spread
throughout the country quickly if there are not enough efficient measures to
curb with. The disease will hit mass of rural population who live mainly on
raising chickens. Lunar new year celebration (Tet) in February, the most
important holiday in Vietnam is the biggest chance for farmers to sell chickens.
Other concerns as Tet comes include widespread smuggling, counterfeit goods,
food safety, price rises and increased traffic accidents.
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