Updated  
November, 18 2011 10:12:02

Investment incentives fail to attract foreign capital

Women work on a motorbike spare part production line at Thai wholly-invested TS Co Ltd in Ha Noi's Noi Bai Industrial Park. A shortage of support industries and a lack of skilled workers have deterred foreign firms from investing in Viet Nam. — VNA/VNS Photo Huy Hung

Women work on a motorbike spare part production line at Thai wholly-invested TS Co Ltd in Ha Noi's Noi Bai Industrial Park. A shortage of support industries and a lack of skilled workers have deterred foreign firms from investing in Viet Nam. — VNA/VNS Photo Huy Hung

HA NOI — Changes in the world economy have positively impacted foreign investment in Viet Nam, but the country still needs to improve its investment climate to capitalise on this trend, experts said.

Recent natural disasters in Thailand, Japan and China have caused investors, especially those in the electronic and manufacturing sectors, to move their resources to other countries, including Viet Nam.

According to a recent survey of 346 respondents conducted by Nikkei Business Online, Viet Nam has the potential to attract significant investment from Japan, with 60 per cent responding that Viet Nam would be one of best places for new production facilities.

However, Viet Nam's investment incentives were not sufficient to attract foreign capital and technology, said Ngo Van Tru, deputy head of the Heavy Industry Depart-ment under the Ministry of Industry and Trade (MOIT).

He warned that slow progress on Vietnamese infrastructure construction would pose a challenge to attracting foreign investment in the future.

Investors also cited weakness in supporting industries and lack of skilled workers as obstacles to luring foreign capital.

Steep interest

Supporting industries are often composed of small and medium-sized enter-prises, which tend to struggle more in difficult economic periods.

They require medium – and long-term capital and sites for production, but they are deterred by steep interest rates on loans, expensive land rent and the high costs of importing technology and paying salaries.

Phan Dang Tuat, head of MOIT's Industrial Strategy and Policy Institute, said that supporting industries have not received enough State assistance and therefore have not been strong enough to break through.

Preferential policies for such enterprises have just released and there have not yet been relevant projects to license, Tuat said.

Do Nhat Hoang, director of the Foreign Investment Agency under the Ministry of Planning and Investment, said that in reality there are many foreigners coming to check out investment options in Viet Nam, especially in the high-tech, support industry and infrastructure sectors.

However, these investors have not disbursed their capital because they needed more time to prepare for their investment activities in Viet Nam, he explained.

Hoang expected that foreign investment would increase sharply in the near future.

Viet Nam attracted US$11.3 billion in foreign direct investment (FDI) during the first 10 months of this year, representing a year-on-year decrease of 22 per cent. In addition, FDI disbursement surged by 1 per cent, hitting $9.1 billion, according to the Ministry of Planning and Investment. — VNS

Send Us Your Comments:
Name:
Your E-mail address:
Title:
 

VietNamNews may edit your comments and not all emails will be published.

Highlight

Mountains of coal sludge still threat to lives in Quang Ninh Mountains of coal sludge still threat to lives in Quang Ninh

Wiping sweat from his forehead, 36-year-old Trinh Duc Sang took big strides along a road covered with muddy coal sludge and dirt to the place that was his home until just three weeks ago. He climbed a rickety ladder that buckled under his weight to reach his neigh-bour's house overlooking a creek. From there, he crossed into his old home.

Vietnam Airlines launches new-generation Airbus plane Vietnam Airlines launches new-generation Airbus plane

The national flagship carrier Vietnam Airlines held a ceremony on July 2 to receive its first Airbus 350-900 aircraft and announce its upgrade service quality programme and new brand identifying system, marking a major step in bringing the airline into the international arena.

Wounds begin to heal between US, Viet Nam 1    Wounds begin to heal between US, Viet Nam

Pham Ba Lu swore thousands of times that he "would not live under the same sky as the United States".

Mental disorders affect 10% of Viet Nam's population: MoLISA Mental disorders affect 10% of Viet Nam's population: MoLISA

Nearly 9 million people in Viet Nam, or 10 per cent of the population, suffer from mental disorders, including 2.5 per cent with serious mental illnesses under social protection.