Vietnam investment abroad leaps in January-April

Vietnamese enterprises vigorously bolstered their overseas investment this year, with the total registered outbound capital of US$1.8 billion in the January-April period, according to the Ministry of Planning and Investment’s Foreign Investment Agency (FIA).
FIA said the country licensed nine new overseas investment projects in April, bringing the country’s total overseas investment in the first four months to about US$1.8 billion compared to US$3 billion for the whole year of 2010. The total sum represents an aggressive approach among enterprises towards outbound investment at a time authorities are checking the efficiency of overseas investment projects as well as the transfer of capital abroad for investment.

The agency said that large-scale overseas investment projects were mainly for energy, rubber growing and telecommunications.

Most notably, the Electricity of Vietnam International Joint Stock Co. (EVNI) was licensed to invest US$800 million in the Ha Se San 2 hydroelectric power project, and Chua Se-Kamong Thom Joint Stock Co. committed US$31.7 million to grow 4,000 hectares of rubber, both in Cambodia.

Earlier, the Ministry of Planning and Investment set this year’s outbound investment target at between US$1.5 billion and US$2 billion.

Vietnamese enterprises last year were licensed to invest about US$3 billion in 25 countries and territories, according to statistics from FIA. By the end of February, local companies had invested in 575 projects in 55 countries and territories with total registered capital of US$23.7 billion.

The mining sector accounts for the lion’s share in total outbound investment, at US$4.3 billion in 88 projects, followed by the agriculture-forestry sector with US$1.87 billion in total pledged capital.

Local companies have also expanded their business beyond neighboring countries like Laos, Cambodia and Myanmar to farther destinations like Japan, France, Germany, the U.S., Britain and African countries.

According to the agency, the rate of return on overseas investments has been very poor, although the investment volume has risen steadily over the last few years, raising concerns about the efficiency of overseas investment.

To better check the efficiency of overseas investment projects, the agency has recently required Vietnamese investors with projects abroad to submit reports on their business performances. The move aims to check the efficiency of overseas investment projects as well as the transfer of capital abroad for investment by State groups and enterprises.

Experts said that it was necessary to monitor overseas investment to regulate the capital outflow as most of the investment capital was from State-owned enterprises.Experts said the Government encouraged local companies to invest overseas during 2007-2008, when the economy had ample capital sources. Now that the country is facing macro-economic difficulties, it’s necessary to assess the feasibility of overseas investment projects, they said, citing the economy’s high trade deficit, unstable balance of payments, and falling foreign reserves. – SGT

Tags: VIetnam Overseas investment