In March 2007, the Foreign Investment Agency and the Industrial Zone and Export Processing Zone Management Department under MPI sent three teams of inspectors to 17 localities which were attracting the most foreign direct investment (FDI) to learn about the implementation of the Investment Law and Enterprise Law, which came into effect on July 1, 2006.

The 17 local authorities estimated that they could attract $16bil worth of FDI this year. Ba Ria - Vung Tau hopes to become the biggest investment attractor with $2.6bil worth of FDI this year, followed by Kien Giang with $2.5bil, and HCM City with $2.2bil.

Analysts said that the targeted $12bil worth of FDI in 2007 proves to be within reach. However, if local authorities can effectively implement the plans on investment promotion, the FDI capital registered this year could be much higher - at $15bil.

They said that decentralisation in project licencing and improvement in investment promotion strategy have been behind the satisfactory result in FDI attraction.

However, officials from MPI have pointed out that local authorities have not paid as much attention to disbursing as they have to attracting capital.

Additionally, shortcomings have been found in project management after licencing. Most local authorities do not know much about the implementation of licenced projects.

Though MPI announced the inspection tours in advance and asked local authorities to give reports about disbursement for and implementation of licenced projects, several localities still could not produce figures about the capital they expected to disburse in 2007. They also could not give a list of big projects to be started this year.

Kien Giang province in the south, for example, has estimated that it will be able to attract $2.5bil worth of FDI in 2007, but it could not forecast the capital to be disbursed. Other localities, including HCM City, Dong Nai and Binh Duong provinces, were also unable to forecast. As the result, while the 17 localities plan to attract $16bil worth of FDI, they estimate that only $2.5bil of capital will be disbursed this year.

MPI officials are worried that the low percentage of disbursed capital will lead to the obstruction of the registered capital flow. MPI has urged local authorities to pay appropriate attention to the management of licenced projects, as Vietnam now needs to improve the capital absorption capability of the national economy.

Source: TBKTVN