Chinese FDI in Vietnam: It is time to tighten, experts say

VietNamNet Bridge – Since 2010, the FDI from China has skyrocketed, from a few hundred million US dollars to several billion US dollars.


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The $2 billion Vinh Tan 1 Coal-fueld Power Plant in Binh Thuan, with 95% of Chinese capital.


Experts said that China's FDI projects come with cheap labor, intensive use of natural resources and destruction of the environment and that it was time for Vietnam to tighten regulations on FDI to prevent such projects.

Among Chinese investors in Vietnam, Texhong Group is the most notable name, with a $300 million fiber plant in Quang Ninh Province, which went into operation in 2013.

In 2014, Texhong kicked off the project to build the Texhong Hai Ha Industrial Zone, also in Quang Ninh, with a total investment of $215 million and poured $300 million into a chain of textile plants inside its industrial zone. To serve the secondary projects here, Texhong is also preparing to build a 2,000MW thermal power plant.

The Chinese group planned to invite about 200 Chinese enterprises to invest in its IZ in Quang Ninh, aiming to turn this IZ into a close textile-garment chain in Vietnam.

Another big Chinese-invested project in Vietnam is the $2 billion Vinh Tan 1 Coal-fueld Power Plant in the central province of Binh Thuan, a joint venture between two Chinese investors and the Vietnam Coal and Mineral Group (Vinacomin). In this project, the Chinese partners hold up to 95% of capital.

Other major Chinese-invested projects include the $400 million Viet Lan Tire Plant in Tay Ninh province and the $337.5 million Vietnam-China Mining and Metallurgy project in Lao Cai province.

According to the Foreign Investment Agency’s statistics, Chinese FDI registered in Vietnam rocketed from $312 million in 2012 to over $2.3 billion in 2013. In January 2016, FDI China ranked third with $179.51 million.

Dr. Nguyen Duc Thanh, Director of the Institute of Economic and Policy Research, the Hanoi National University, said Chinese capital was flowing around the world, not only to Vietnam. As a neighbor of China, the flow is stronger.

He noted that China has capital but does not have modern technology like Japan and South Korea so its FDI focuses on exploitation of natural resources and cheap labor.

Dr. Thanh said such projects don’t benefit Vietnam. "Regarding mining projects, as the price for minerals is currently low, some provinces that are in budget deficit want to sell more. Chinese investors understand this fact so they invest heavily to buy cheap resources. Vietnam currently sells natural resources at low prices and in the future it will have to buy natural resources at expensive prices," Thanh said.

Economist Bui Trinh said that by welcoming Chinese FDI coming with outdated technology and exploitation of natural resources, Vietnam would lose natural resources while the country’s environment would be harmed.

"That problem has been considered for a long time but it has not been resolved," said Trinh.

Dr. Trinh said Vietnam should tighten regulations on FDI to prevent such projects.

Dr. Tran Dinh Thien, Director of the Vietnam Institute of Economics said Vietnam was excited about integration and has forgotten the tragedies that can happen later.

 

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Lao Dong

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