News Analysis: Vietnam sees huge gap between registered FDI and disbursement

HANOI, July 22 (Chinese media) -- Vietnam lured 31.6 billion

U.S. dollars in registered foreign direct investment (FDI) in the first half of

this year, but the disbursed capital stood at just about five billion at the

same time. The gap made many people ask whether Vietnam has favorable condition

for actual capital investment.

According to figures from the Ministry of Planning and Investment (MPI), FDI disbursement made up between 50 and 80 percent of the nation's newly registered capital in the 2000-2005 period. However, the ratio fell to 4.1 billion out of 10.2 billion in 2006, while eight billion out of 21.3 billion in 2007.

A woman counts money at a branch of the Vietnam Investment and Development Bank in Hanoi February 25, 2008.(Chinese media/Reuters FilePhoto)
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For the past two years and a half, the growth in

newly registered FDI has been much faster than that of the disbursed capital,

according to the MPI Foreign Investment Agency.

Disbursement of FDI refers to actual capital

investment made following an earlier commitment by foreign investors in the form

of registering for a investment license. It is therefore a more accurate measure

of the real impact of FDI on the national economy.

It is understandable that after investors obtain the

license for the project, it takes a certain period of time to prepare for

project implementation, like site clearance, mobilizing capital and recruiting

people, but some projects in Vietnam takes too long and the gap between FDI

registration and disbursement stands huge now.

The problem reflects the absorbability of the

Vietnamese economy, according to a recent MPI report. Bottlenecks like poor

infrastructure, shortage of electricity and skilled personnel still fail to

match the economic development, said the report.

Inadequate power supply in hot summer days is a big

headache for companies in Vietnam. Last month, a great number of Vietnamese

provinces suffered from electricity cut. Electricity of Vietnam, the country's

main power producer, said that the country now lacks between 2,000-2,500 MW of

electricity and the power shortage will last until the end of July.

Vietnam is also faced with shortage of qualified

personnel. "It is hard to find Vietnamese employees who has IT background and

speaks English," said Tang, an official of a foreign IT company in Vietnam. "The

qualified personnel are not enough.'

Many foreign managers have found Vietnamese workers

like to lead a comfortable life and hate to work extra hours even though the

company pays them.

Difficulty in site clearance is also cited by many

foreign investors for slower project implementation, as some farmers are

unwilling to leave their land or not satisfied with the compensation.

To better utilize the FDI capital, the Vietnamese

government has vowed to speed up the FDI disbursement. The MPI has set the

target to reach disbursement of about ten billion dollars this year. It is

conducting studies on the advantages and challenges facing Vietnam in continuing

to attract the FDI capital.

MPI has also decided to hold regular open talks with

foreign investors to hear their concerns and try to deal with the problems

effectively.

Although the nationwide FDI disbursement ratio is low

in Vietnam, there are some provinces well prepare themselves for the

implementation of foreign-funded projects.

According to the Department of Planning and

Investment of the country's southern Dong Nai Province, its FDI disbursement

rate currently stands above 50 percent. In the first half of this year, one real

estate project began construction five days after the investment license was

issued.