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According to Vietnamese government documents, a lack of investment support has led major companies to refuse to invest in the country.
Vietnam has missed out on billions of dollars of investment from multinational companies such as Intel and LG Chem due to a lack of sufficient investment incentives, the Ministry of Planning and Investment said in a document seen by Reuters.
U.S. chipmaker Intel proposed to invest $3.3 billion in a project in Vietnam and asked the country for a 15 percent “cash support,” but later decided to move the project to Poland, the ministry said in a June 29 document.
South Korea’s LG Chem also invested in a battery project in Indonesia, bypassing Vietnam, after asking the Vietnamese government to cover 30 percent of the investment costs, according to the document.
Photo: EPA-EFE
“Recently, many large groups have come to Vietnam to explore investment opportunities, but later decide to relocate to other countries as Vietnam has no regulations on investment support,” the document said.
A key manufacturing base for companies such as Samsung Electronics, Foxconn Technology Group and Intel, Vietnam relies heavily on foreign investment for growth, with foreign-invested companies accounting for about 70 percent of Vietnam’s total exports.
The ministry document also revealed that U.S. chipmaker Intel has shelved plans to invest in Vietnam, which would have nearly doubled the company’s operations in Southeast Asia.
The document added that Austria-based semiconductor manufacturer AT&S decided to invest in Malaysia after its request for investment support in Vietnam went unmet.
Samsung also planned to move some production to India, according to the documents.
Still, Vietnam’s economic growth is accelerating and is likely to meet or exceed the government’s 6.5 percent target this year, said Minister of Planning and Investment Nguyen Chi Dung.
According to a government statement, Prime Minister Dung said economic expansion could reach 7 percent this year, driven by improvements in the industry and construction sectors.
The IMF forecasts Vietnam’s GDP to expand 6 percent this year, up from 5 percent last year, a pace that would make it one of Asia’s fastest-growing economies.
Dun said the economy was also benefiting from increased exports and foreign direct investment (FDI).
Deputy Minister of Planning and Investment Tran Quoc Huong said FDI commitments this year could reach US$39 billion-40 billion, up from last year.
The country had committed $36.6 billion in FDI as of December last year.
Additional reporting by BloomberG
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