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Disbursed FDI touches a record $14 mn in Vietnam

09 Dec '15
2 min read

Pledged and disbursed foreign direct investment (FDI) in 2015 are expected to touch new highs in Vietnam, after its government eased business regulations to attract foreign investors through the 12-nationTrans-Pacific Partnership (TPP) trade pact.

Vietnam emerged as the biggest beneficiary of the pact with disbursed FDI expected to touch a record high of $14 billion, $1.5 billion more than last year, while pledged foreign investment is forecast to increase over last year's $21.9 billion, according to an agency report.

“Our improving investment environment and trade agreements help attract more companies to move from China and other regional countries to Vietnam,” Planning and Investment Minister Bui Quang Vinh told the agency at a conference in Hanoi recently.

The minister attributed the increasing FDI inflow to the steps taken by the government to ease business regulations earlier this year.

The surge in Vietnam's foreign investments comes at a time when neighbouring countries such as the Philippines are reporting declining FDI, reflecting overseas investors' increasing attraction to Vietnam. The country stands to be the biggest winner of the 12-nation TPP accord, which will boost exports with tariff reductions on a range of products, including shoes, seafood and clothes, according to the World Bank.

The TPP could boost Vietnam's gross domestic product by about 8 per cent and increase exports by 17 per cent over the next 20 years, the World Bank said in a report last week.

“Sticky capital inflows through FDI is very important for Vietnam as it tries to import more goods to industrialize,” said Trinh Nguyen, a Hong-Kong based senior economist for emerging Asia at Natixis SA. “This is a much more stable way to access funding for investment, which Vietnam needs at this level of development.”

Out of the six major countries in the ASEAN bloc, Vietnam is expected to post the strongest economic growth this year, according to the Asian Development Bank. The country's growth is expected to accelerate through the second half, underpinned by rising private consumption, export-oriented manufacturing and FDI, it added. (SH)

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