Foreign direct investment (FDI) disbursements will reach about  $11 billion in 2012, signaling that Vietnam remains a favourite venue for investors despite the country’s economic slowdown. The steady FDI disbursement sum this year, however, could not dispel the challenges faced by foreign investors, including concerns about labour, infrastructure and unsettled policies. The Ministry of Planning and Investment’s (MPI) Foreign Investment Agency reported that new FDI commitment capital—as opposed to disbursements—this year to date has reached only $12 billion, a 21.4 per cent drop in commitments year-on-year.

Disbursed capital at FDI projects was estimated at $10 billion from January to November 2012, according to the statistics of Foreign Investment Agency. “We received approximately $1 billion FDI disbursements on average every month, so I believe the total disbursements will reach $11 billion this year, equivalent to the level of last year,” said Dao Quang Thu, Vice Minister of Planning and Investment. Thu emphasised that many foreign investors continued to pump money into projects in Vietnam despite of the decline in new investment commitments. “This result reflects our effort in supporting foreign investors by removing obstacles at FDI projects,” said Thu.

According to an MPI report, steady FDI disbursements have contributed significantly to sustain economic growth, especially when the domestic private investors are struggling in fund mobilisation and the Vietnamese government tightens fiscal policy to rein in inflation. “Given the investments of transnational companies in Vietnam, I think the disbursements could be better next years,” said Nguyen Mai, chairman of Vietnam Association for Foreign Invested Enterprises.Samsung Electronics last month obtained an investment certificate for its expansion project worth $830 million in northern Bac Ninh province, bringing its total investment in Vietnam to $1.5 billion.

In the year, Vietnam also received investments from transnational companies such as Bridgestone, Nidec Corporation, General Electric, Jabil Corporation and Sumitomo Corporation. Do Nhat Hoang, director of Foreign Investment Agency, said the decline of FDI commitments was a sign reflecting the concerns of foreign investors over Vietnam’s slowing economic growth, which is expected to grow around 5.2 per cent this year.Hoang believed the concerns of foreign investors would calm down as the Vietnamese government was implementing many actions to improve the investment climate, such as amending the Investment Law and offering more incentives to foreign investors.

According to a Global Manufacturing Competitiveness Index report released by Deloitte Touche Tohmatsu and the US Council on Competitiveness, Vietnam jumped from its current global ranking of 18th to 10th. The report is based on the responses of more than 550 senior manufacturing executives worldwide to a wide-ranging survey discussing the current business environment and manufacturing sector global competitiveness.

Vietnam Investment Review - December 04, 2012