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FDI inflow falls but services sector defies trend

Update: July, 12/2012 - 10:40

HCM CITY — The services industry has become the most attractive sector for foreign direct investment (FDI) into HCM City, accounting for 50 per cent of total inflow in the first six months of this year.

"FDI intake is increasing for the services and processing industries while decreasing in real estate and construction. This movement is in line with economic development trend of the city," deputy director of the municipal Planning and Investment Department, Lu Thanh Phong, was quoted as saying by the Dau Tu (Viet Nam Investment Review) newspaper.

According to the department, 33.8 per cent of FDI registered in the first six months - or US$83.8 million) - has gone into medical and social assistance, while processing and manufacturing industries have attracted 32 per cent.

The automobile and motorbike industries received 18.6 per cent into their wholesale, retail and maintenance services industry.

While there has been a sharp increase in additional capital inflow for existing FDI projects, there has been a significant decrease in new FDI projects, the department said.

Since early this year, the registered capital for new projects was just $248 million, equal to just 14.4 per cent for the same period last year, but 50 projects have wanted to expand their capital by $495 million, 127 per cent of last year's figures for the corresponding period.

The additional FDI inflow into existing projects is aimed to strengthen production and open new business, the department said.

For instance, Singaporean Viet Nam Brewery Limited (VBL), producers of the Tiger and Heineken beer brands, South Korean Lotte Viet Nam and Japan's Sankyu Viet Nam increased their capital by $68.1 million, $25 million and $ 9.5 million respectively.

Overall, FDI inflow is expected to reduce significantly this year, especially into real estate and hi-tech industries. A weak supporting industry and low quality of human resources are said to be factors in reduced investment in the hi-tech sector. — VNS

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