Last year saw the strongest growth in Vietnam's overseas investment in terms of new projects and total investment capital.

Statistics released by the Ministry of Planning and Investment reveal domestic investors registered 37 international investment projects with combined capital of over US$367.6mil last year.

The figure represents a doubling in the number of projects and an almost 32-fold increase in capital, it said.

Twelve of the investment projects, with combined capital of $293mil, are focused in industrial production, while 10 others - valued at a combined $65.8mil - are involved in the agriculture sector.

The Vietnam General Rubber Corporation and the Dac Lac Rubber Company launched two major rubber-growing projects in Laos valued at a total of $57.8mil.

The service sector accounted for 14 of the 37 projects, with $8.5mil invested in several smaller projects.

Vietnamese businesses investing abroad say it can be a good way to reduce transport and other costs associated with trading with foreign partners in a particular market.

However, they say procedures to transfer capital abroad are complicated because of formalities and vague procedures in assessing and licensing projects, while the process can take a long time to complete.

General director of the Viet Lao Joint-stock Company, Nguyen Thang Long, said that no matter how profitable outbound investments may be, cumbersome and time-consuming procedures deter prospective domestic investors.

He said a large-scale project often required appraisal from six or seven different ministries and final approval from the Prime Minister's office.

The general director of T&T Trading and Technology Company, Do Quang Hien, reported similar difficulties. "We have been working on procedures for an international investment project for two years, but it has not been completed yet," he said.

A number of foreign-invested businesses in Vietnam are seeking to invest in third countries, but it is almost impossible for them to do so because of 1999's Decree 22/CP, which excludes foreign-invested businesses operating in Vietnam from those permitted to invest abroad. At present, relevant cases are referred, to the Prime Minister directly for approval.

Additionally, investors say Vietnamese companies do not have optimal State assistance in dealing with disputes, given the loose relationship between Vietnamese companies and the nation's diplomatic and trade offices in foreign countries.

However, the new Law on Investment, scheduled to come into effect in July, is widely expected to facilitate international investment activities.

Companies have suggested the Government and relative authorities decentralise the licensing of overseas projects and reduce the number of ministries required to appraise future projects.

The Ministry of Planning and Investment said Vietnam now has 149 operational international investment projects worth a combined $620mil, 49 of which (valued at $366.16mil) are located in Laos, Cambodia, and Russia.

Source: Viet Nam News 22/05/2006