Thursday, August 14, 2008

Vietnam increases overseas investments

Domestic businesses up int’l investments

(13-08-2008)

HA NOI — Accompanying the recent rush of FDI over the past few years has been an increasing number of overseas Vietnamese investments, the Foreign Investment Agency under the Ministry of Planning and Investment reported yesterday.

Addressing a conference to promote Vietnamese overseas investment, the agency’s deputy director Bui Quoc Trung said that as of July 22 this year domestic enterprises have invested in 317 projects a total of over US$2.5 billion, with $1 billion or 40 per cent already disbursed.

The average scale of investment was around $7.8 million per project.

Viet Nam’s overseas projects mainly covered industry and construction sectors at 42.9 per cent of projects and 69.4 per cent of total capital, services at 38.2 per cent of projects and 15.4 per cent of total capital, and the rest in agriculture.

Loaded Laos

Of 41 countries and territories receiving Vietnamese investment, Laos attracted the most, with 123 projects worth over $1.28 billion. It was followed by Cambodia and the US with 34 projects worth $153 million and $71 million respectively.

Viet Nam’s top overseas projects include Sekaman 1 and Sekaman 3 Hydroelectricity Plants in Laos worth $715 million combined. Another oil exploration and drilling project in Algeria was worth $243 million, while the Nam Mo Hydroelectricity Plant in Laos was capitalised at $142 million. The Ha Noi-Moscow Trade Centre in Russia was worth $120 million.

"Overseas investment can bring multiple benefits for the country’s economic development and give Vietnamese firms a change to expand their markets as well as enhance their competition," said MPI deputy minister Cao Viet Sinh at the conference.

Vietnamese investors have many favourable conditions to invest abroad. Decree 78 dated August 9, 2006 on overseas investment says that domestic businesses, both public and private, can automatically invest overseas if they fail to receive a response from relevant management agencies 15 days after submitting in full the required documents.

Growth in the level of overseas investment and the number of projects has confirmed the ongoing efforts of Vietnamese businesses to further penetrate the regional and international economic markets, Sinh said.

The number of overseas projects, however, had not yet matched Vietnamese business desires and abilities, he noted.

Red tape

PetroVietnam deputy general director Do Van Hau said that the company had poured more than $218 million into 20 projects overseas as of June, with 93 per cent of the investment going to exploration and development and the rest to exploitation.

However, it still took the company a few months to complete formalities, which could influence their overseas investment, Hau noted.

He petitioned the Ministry of Finance to consider negotiating with countries where PetroVietnam made investments, and then sign agreements on investment protection, tax incentives and double-tax avoidance to support the company implementing projects. He also suggested that the Government draw up a suitable policy on attracting high-skilled labourers for overseas crude oil projects.

Representatives from Viettel, the military-owned mobile service provider, said that the company has to date invested $44.8 million in four projects in Laos and Cambodia. The company plans to raise the level of investment capital for its mobile service project in Cambodia to $70 million from the current $28 million.

She suggested that the Government offer more incentives to facilitate enterprises making investments overseas. She also called for more support from management authorities, especially from trade counsellors who could provide local firms with updated information about political situation and business and investment climates in markets abroad.

In order to promote overseas investment, Trung encouraged Vietnamese enterprises to explore more investment opportunities in potential markets such as Laos, Cambodia and Russia, as well as seek new markets which were suitable to local enterprises’ capacities.

Strong legal framework and policies on overseas investment were also necessary to encourage enterprises to invest abroad. Overseas investment in key sectors needed for the country’s economic growth like crude oil, coal, electricity, tin and iron productions needed encouragement. — VNS