FDI pledges decline for third straight month

During the month, Vietnam has attracted US$762.84 million of fresh FDI but seen investors unprecedentedly adjusting down their capital in operational projects by US$273.2 million, according to the Ministry of Planning and Investment’s Foreign Investment Agency (FIA).

In the January-November period, total fresh and adjusted FDI capital is recorded at US$18.1 billion, down 10.5% year-on-year.

In September, the country has lured over US$2.13 billion in new FDI pledges, raising the total in the first nine months to US$16.43 billion, 4.2% below the same period last year.

Last month, FDI pledges stayed at only US$1.18 billion, putting January-October FDI approvals at US$17.6 billion, down 8.7%.

According to the FIA, just a few FDI projects approved in November are large and one of them costs more than US$1 billion, which is the project of LG Display Co. Ltd. worth over US$1.5 billion in Haiphong City.

The new FDI figure is far below what business insiders have expected. Vietnam is considered a good destination thanks to the establishment of the ASEAN Economic Community (AEC), the shift of foreign investors from China to Southeast Asian markets, and the impact of free trade agreements between Vietnam and other countries.

According to insiders, one of the reasons affecting the low FDI levels in recent months is the presidential election in the U.S., which has led foreign enterprises to practice caution and  U.S. President-elect Donald Trump has threatened to pull America out of the Trans-Pacific Partnership (TPP) trade pact to which Vietnam is a signatory.

Another reason behind the fall of foreign investment is the serious environmental pollution on the central coast in April.

Since then, leaders of many provinces have become more environmentally conscious, thus declining high risk projects.

Other factors that can lead to the FDI decline is the decrease of FDI from big companies on global markets, and the fiercer competition among countries to attract FDI, not to mention shortcomings of Vietnam, including the lack of skilled labor, weak infrastructure and low-quality services, underdeveloped supporting industries, and the gap between policies and their implementation.