VietNamNet – A report on the impact of the Vietnam- US Bilateral Trade Agreement (BTA) finds the US is Vietnam’s biggest foreign investor.

After BTA came into force in December 2001, two way trade between the US and Vietnam surged rapidly. According to the Ministry of Planning and Investment (MPI), the US has never before listed among the 10 biggest investors; however, in a report released on February 20 by MPI and Star Vietnam (under the US Agency for International Development, assisting Vietnam to implement BTA and join WTO), the US is now Vietnam’s biggest direct foreign investor.

According to Deputy Head of MPI’s Foreign Investment Agency, Nguyen Anh Tuan, when considering investment carried out through third countries, US foreign direct investment (FDI) is 3.5 times higher than MPI’s figures, which showed that by the end of 2004, the US ranked 11^th of 75 nations and territories with FDI in Vietnam. The US has 215 registered projects worth $1.3bil.

The report also showed that during 1998-2004, total US investment in Vietnam reached $2.6bil, much higher than MPI’s figure of $730mil. Statistics released by Star Vietnam Project also show the US, not Japan, Singapore, Korea or Taiwan, as Vietnam’s biggest investor with implemented capital worth $531mil.

Star Vietnam’s project officers pointed out that it was unreasonable to count on US investment through third countries. Steve Parker, Director of Star Vietnam Project said that US companies prefer making investment though third countries for several reasons. Current US laws encourage US companies to make investment from their overseas son-companies. Management work proves to more favourable if conducted from a regional branch.

Well known US names like Coca Cola and Procter & Gamble make investment from Singapore, Exxonmobil from Hong Kong. Statistics show that US investment from third countries is much higher than investment from the mother country. If following the method of calculation suggested by Star Vietnam, during 1988-2004, US companies poured $2.6bil into Vietnam, or double the figure based on the traditional method of calculation.

The research team also stressed that from 2001 to 2004, total implemented capital of US investors, including those through third countries, increased by 27% per annum on average. In 2003 and 2004 alone, capital reportedly doubled previous years’ levels. The US jumped into second position in foreign investment in 2003, just after Japan and became the leading investor in Vietnam in 2004.

Mr Tuan said that the last time was the first stage of US investment into Vietnam. “I believe that FDI from the US will be higher in the next stages, when commitments about market opening under the BTA roadmap come into force,” Mr Tuan said. He also forecast that US investment would focus on telecommunication and infrastructure in the coming period.

(Source: TN)