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The effectiveness of implementing foreign investment projects is much more important than the pledged capital, deputy head of the Central Institute of Economic Management Vo Tri Thanh told Thanh Nien Daily Tuesday.

Specifically, 385 new projects worth $5.42 billion were licensed between January and July, down 64.1 percent in value over the same period last year, said the agency.

Meanwhile, $4.68 billion was poured into 125 operational projects, down 55.5 percent year-on-year, said the agency.

“Despite the sharp decrease, the pledged FDI for the period is not an unusual figure. The disbursed investment and effectiveness of project implementation are much more important,” Thanh said.

Besides, $10.1 billion worth of pledged FDI in the current context of the global economic slowdown is not a bad figure, and the real estate and service sectors are still considered attractive by foreign investors, he said.

“It’s normal for some foreign investors to lower investment in several fields because they must struggle against difficulties in their countries amid the global economic crisis. It is not because Vietnam’s business environment has degraded.”

The break-up of FDI pledges made so far is 45 percent for the hospitality and restaurant services sector, 21 percent for the industrial sector and processing industries, and 18 percent in real estate.

Ba Ria-Vung Tau has lured up to 63 percent of the total FDI pledged for the seven-month period. In July, a Chinese steel plant with an investment of over $1 billion was licensed for operation in the province.

In February, the province gave the nod to the expansion of a tourism and entertainment complex by US-based Winvest, upping its investment from $300 million to more than $4.1 billion.

Long-term prospects

Vietnam is assessed to have great potential for foreign investment in the long term, Thanh said.

Head of the Foreign Investment Agency Phan Huu Thang recently said some investors were negotiating with local authorities to invest in 187 projects worth $85.4 billion between 2009 and 2010.

Vietnam expects to receive $12 billion of pledged foreign investment in 2009, Thang said. Disbursements may total $8 billion this year, and increase to $9 billion next year, according to the agency.

Last year, the country had $71.7 billion worth of FDI pledged, of which $66.4 billion was for 1,557 new projects, and the rest for 397 operational projects.

Between January and July, $4.6 billion worth of FDI was disbursed, down 22.5 percent over the same period last year, according to the agency.

Great efforts have been made by both foreign investors and the Vietnamese side to reach this figure ($4.6 billion), Thanh said.

“I think the country could fulfill its target of disbursing $8 billion for the whole year,” he added.

“What we expect most from foreign investors is a higher rate of capital they actually pour into Vietnam,” he said. The capital actually invested accounts for just 60-70 percent of the pledged amount, he noted.

Vietnam does need foreign sources of capital including FDI, official development assistance (ODA) and remittances to offset deficits in its international payment, Thanh stressed.

“In the coming time, FDI will be still an important source for Vietnam, as the country needs to develop rapidly and in a stable manner.

“Foreign invested projects help Vietnam not only to ensure macroeconomic balance, but also access advanced technology and management experience,” Thanh said.

Thus, the country should continue to improve its business environment through administrative reforms, infrastructure improvement, human resource development and implementation of international commitments, he said.

Reported by Ngan Anh