VietNamNet Bridge - This year, Vietnam can draw $20 billion of foreign investment capital, compared to $10.2 billion last year, experts predict. However, this prediction could only become reality if impediments to foreign investors are eliminated. 

82-year-old foreign investor 

Early March 2007 Tokyshi Nakagawa, 82, General Director of the Shinagawa Corporation, which specialises in gas production in Inagi, Japan came to Vietnam on a five-day investment survey in HCM City and some southern provinces. After this short survey, this senior business decided to invest in Vietnam. 

According to Mr Tokushi Nakagawa, many friends and his family advised him not to invest in Vietnam as he is advanced in years, but the survey exposed many big opportunities, which he doesn’t want to miss. 

Shinagawa plans to build a US$5 million gas-producing plant in the southern province of Dong Nai. Investment will be doubled in the second phase.

Mr Tokushi Nakagawa is one of many owners of small- and medium-sized companies in Japan who have visited Vietnam recently to seek business opportunities. 

Provinces that in the past haven’t attracted foreign investors much like Ha Tay, Kien Giang, Ninh Thuan are now quite familiar to many foreign investors. 

Nguyen Van Quy, General Director of the Trung Quy Company, the investor of the Phuoc Nam Industrial Zone in southern Ninh Thuan Province, said: “We received three groups of businessmen from the US, Singapore and Japan in the first week of April 2007. A US automobile component and tyre producer signed an agreement to invest in a tyre project with $70 million in the first phase, which can increase to $700 million in the future.” 

In a recent meeting with leaders of the HCM City Department of Planning and Investment, Isao Takahashi, Chairman of the Office of the Tokyo Small- and Medium-sized Enterprise Centre, said that this centre had more than 50,000 member companies that operated in various fields. In a recent survey, many of them said that they planned to invest in Vietnam. 

Money can run to another place 

According to experts, if Vietnam doesn’t quickly make improvements in all areas to receive and absorb the above source of investment, capital could flow to other countries. 

In some provinces, prolonged investment formalities have discouraged investors.  

An official of the Ministry of Planning and Investment (MPI) said that since the government issued Decree 108 guiding the implementation of the Law on Investment in late 2006, which allows provincial, municipal People’s Committees and management boards of industrial and economic zones to licence most investment projects, many provinces and agencies still consult the government for licencing. As a result, many projects are not licenced for a long time. 

This happens to many projects in the service field, and more so since Vietnam’s WTO commitments took effect this year. 

“There was a software design project with only around $10,000 of capital but the Department of Planning and Investment of a big city didn’t dare licence it, but asked the MPI’s opinion,” the official said. 

Besides formalities, many investors worry about the overloading of infrastructure, especially the risk of blockage at seaports in HCM City and Dong Nai, which could occur in the next several years. 

According to Walter Blocker, Chairman of the American Chamber of Commerce (Amcham) in HCM City, HCM City’s ports will not be able to host all container ships this year and the situation will be more serious in 2008, 2009 before the Cai Mep port is put into operation in 2010. 

“Without timely adjustments of seaports, the system of roads, this will be a big danger affecting Vietnam’s attraction of investment in the near future,” Mr Blocker said. 

Chairman of the Hong Kong Business Association Michael Chiu said that the prices for land in Vietnam, particularly in HCM City, were too high, which makes the cost for office and housing there much higher than cities in the region like Bangkok or Kuala Lumpur. 

“Too high land prices will lessen Vietnam’s competitive advantage in investment attraction in production and other industrial areas,” Mr Michael Chiu said. 

Where might capital flow? 

A recent survey by the MPI reveals industry and service as the two fields that continue to be attractive to foreign investors. Heavy industry is especially attractive, with over $10 billion of capital.  

Real estate is also getting hot with projects worth hundreds of million of US dollars. 

In the hi-tech area, since Intel and Nidec announced they would invest $2 billion in Vietnam, many big investors have come to this market. 

Among the newcomers are Taiwan’s Foxconn, which plans to invest up to $5 billion in hi-tech zones in the northern provinces of Bac Ninh and Bac Giang; Taiwan’s Compal group with a $500 million laptop manufacturing project in northern Vinh Phuc province. 

(Source: Tuoi Tre)