Foreign investment forecast to hold steady

Monday, Jun 23, 2014 08:00

According to the Foreign Investment Department under the Ministry of Planning and Investment, in the first five months of 2014, FDI totalled over US$5.5 billion, just 65.7 per cent of the same period last year.— Photo cafef
Compiled by Le Hung Vong

Local agencies expect that foreign-direct investment (FDI) for 2014 will reach the same volume of last year, as major FDI projects are slated to be signed in the second half of the year.

According to the Foreign Investment Department under the Ministry of Planning and Investment, in the first five months of 2014, FDI totalled over US$5.5 billion, just 65.7 per cent of the same period last year. However, FDI in the southern region, including HCM City, Dong Nai and Binh Duong, rose sharply.

During the period, HCM City received total FDI of $793 million, an increase of 119 per cent compared with the same period in 2013.

Binh Duong alone received FDI of $978.4 million for 65 new FDI projects and 56 other projects currently under operation, reaching its FDI target for the year.

Le Thanh Cung, chairman of Binh Duong's People's Committee, said that simplified administrative procedures and well-developed infrastructure at industrial parks had helped the province attract FDI.

In addition, investment resumed after businesses were damaged by rioters during protests over China's placement of the Haiyang 981 oil rig in the territorial waters of Viet Nam in early May.

In an interview on VTV, Minister for Planning and Investment Bui Quang Vinh said that a number of big FDI projects would be licensed this year. "FDI this year will not be lower than 2013," he said.

In HCM City, authorities gave the go-ahead to the Korean Samsung Group to build a plant to manufacture electronic goods at a total investment of over $1 billion in the Sai Gon Hi-Tech Park in District 9.

At the Viet Nam – Singapore Business Forum held in early June in HCM City, Dang Xuan Quang, deputy head of the MPI's Department of Foreign Investment, said Viet Nam had again promised foreign investors that it would continue to improve the investment environment.

Motorbike market

Despite promotions that have cut prices and launches of new motorbike models, many shop owners believe business is on the wane.

Nguyen Tuan Ngoc, head of Phat Tien store in HCM City's District 4, said his big motorbike shop had sold only 25 bikes a day, down sharply from previous years.

Although many shops in the city sell far fewer than 25 a day, they are smaller in scale than Ngoc's store. However, these small shops are experiencing a drop in sales as well.

The popular brand Honda has experienced a drop in sales, but other motorcycle brands such as Yamaha, SYM, Suzuki and Piaggio have also seen fewer purchases, said Ngoc.

The owner of a motorbike store, who declined to be named, said even during the peak months of the year (usually Tet or Lunar New Year), motorbike sales rose only slightly.

"In the other months of the year, store workers have nothing to do but catch flies," the motorbike shop owner was quoted as saying in Tuoi Tre (Youth) newspaper.

In Phu Nhuan District, a motorbike-shop owner said that all of the bike brands had offered incentives to customers, including discounts, installment sales, insurance gifts, helmet donations, free maintenance services, and free consulting services. But nothing had been effective.

Ngo Van Xong, owner of Ngo Ha Son store on Hoang Van Thu Street in Phu Nhuan District), who has sold motorbikes for 20 years, said the market was very quiet.

"No used motorbikes are being sold or exchanged, so how can we have customers," he said.

Sales have slumped so much that a number of shops that pay rent of VND20 million to VND30 million per month have had to close.

A motorbike shop at 206B Le Van Sy Street in Phu Nhuan District, which was a 3S dealer serving a Yamaha brand by Hong Minh Phat Company several months ago, has closed and is now a coffee shop.

"This bike shop opened two years ago, when the local motorbike market began its downward trend," said a representative of Hong Minh Phat Co.

"The number of vehicles sold has declined and revenue is not sufficient to cover costs. And we have to pay about VND160 million per month for rent. So we decided to close the shop," he told Tuoi Tre.

According to a represe-ntative of the Vietnamese Motorbike Manufacturers Association, in the first five months of 2014, about 1 million motorbikes were sold, down by 10 per cent compared to the same period in 2013.

Economic difficulties have led customers to tighten their budgets, affecting motorbike sales.

Minoru Kato, general director of Honda Viet Nam, was quoted as saying in Tuoi Tre that sales fell by 5 per cent last year, to 1.85 million motorbikes.

This year, the company has turned out 700,000 motorbikes, down 10 per cent compared to the same period last year. Similarly, sales of other motorbike brands have also fallen sharply.

More remittances

The Viet kieu (overseas Vietnamese) community has channeled more remittances into the country's real estate sector this year, according to the deputy director of the State Bank of Viet Nam's HCM City branch, Nguyen Hoang Minh.

Last year, 70 per cent of overseas Vietnamese remittances were invested in the manufacturing and business sector, 21 per cent in the real estate sector, and the remainder sent to support relatives.

However, the situation has changed, and more remittances, mainly from North America and Europe, had been invested in the property sector, Minh was quoted as saying in the Vietnam Investment Review.

Minh said in the first five months of 2014, the overseas Vietnamese community remitted $1.6 billion through banks in HCM City, a year-on-year increase of 3 per cent.

He said HCM City was expected to receive remittances of $2 billion in the first half of the year, and nearly $5 billion for the entire year. Last year, overseas Vietnamese remittances via HCM City-based banks reached $4.85 billion.

Nationwide, a total of $11 billion in remittances were sent last year, according to the National Committee for Overseas Vietnamese (under the Ministry of Foreign Affairs).

Remittances through commercial banks in HCM City increased sharply in the first five months of 2014.

Nguyen Mien Tuan, deputy chairman of the board of Sacombank, said remittances through Sacombank in the first five months of the year rose by 10 per cent over the same period last year.

Remittances through Dong A Bank amounted to $1.53 billion in 2013, a year-on-year increase of 13 per cent compared with the previous year, and is expected to increase by 20 – 25 per cent this year.

A report from the World Bank says global remittances reached a total of $542 billion in 2013, and are estimated to be $581 billion in 2015 and $681 billion in 2016.

With $70 billion in remittances, India was the biggest remittance earner in 2013, followed by China, with $60 billion; the Philippines, $25 billion; and Mexico, $22 billion. Viet Nam ranked ninth, with $11 billion last year.

Overseas Vietnamese usually send remittances in the final months of the lunar year (from October to January of the next year) before the traditional Tet (Lunar New Year) holiday. The volume of money remitted home in these months is 20-25 per cent higher compared with other months.

Because the economies of the US, Australia and Canada have begun to recover, overseas Vietnamese living in these countries had earned more and sent more remittances, Minh said. — VNS

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