Many foreign direct investment (FDI) project investors have had their investment certificates revoked due to financial incapability.
Provincial authorities have been focused on the volume and value of FDI projects without considering their quality and the capability of investors.
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| Many provincial authorities have tried to attract as many FDI projects as possible |
Authorities of Quang Nam Province are finalising procedures to revoke three investment certificates of FDI property projects due to the unacceptable delay of their progress. They are USD4.15 billion Dragon Beach Resort project invested in by the Dragon Beach Group, a joint venture between Tano Capital LLC and Global D&C Inc (USA); USA’s Pegasus Fund high-class sea eco-tourism and Canada’s Que Viet tourism projects.
The People’s Committee of Ba Ria-Vung Tau Province has made a decision to stop operation and revoke the property investment certificate of the Republic of Korea’s AJ Vietstar Construction & Development Limited Company due to a financial shortage.
Additionally, in Ninh Thuan Province, Ca Na Steel Complex project worth nearly USD9.8 billion is seeking a new investor. The project’s investor was Maju Stabil Sdn, a unit of the Malaysian-based Lion Group. The local authority has failed to contact the investor in Malaysia.
In July, the Khanh Hoa Province People’s Committee revoked the investment certificate of STX-Vina Heavy Industry Complex project whose investor was the Republic of Korea’s STX Group. With a total capital of USD500 million, this complex is considered to be the largest licensed FDI project in the province.
There have been many problems other than FDI projects which have had their investment certificates revoked. For example, Taiwan’s USD16 billion steel project investor Formosa Heavy Industry Group has requested that the Prime Minister give them support such as exempting import-export taxes or taxes imposed on the contractor, otherwise the project cannot be implemented due to a shortage of capital.
The investment certificate of Taiwanese-invested Guang Lian steel project has been renewed 4 times. Now its investor wants to increase the capital, output and the project land area as well as expand the project’s completion date by another 4 years.
The revocation of licenses has many serious consequences including a waste of land, lost opportunities for other investors, serious impact on the lives of locals who were forced to move for site clearance and management challenges for authorities.
Many questions have been raised as to why authorities pave the way for these FDI projects. FDI projects are considered to be an important factor to assess the investment environment and socio-economic growth of a province. Thus, many authorities try to attract as many FDI projects as possible.
For example, with only a project worth USD9.8 billion, Ninh Thuan Province was ranked in the top 10 provinces attracting the most FDI capital. Previously, it was one of provinces attracting the least FDI capital.
Le Tri Thanh, Manager of the Investment Promotion Centre of Quang Nam Province said, “In the past, the province priotised attracting FDI projects without paying attention to quality and investor capability.”
According to the latest report provided by the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, from the beginning of this year to August 20, the total number of newly-licensed FDI projects had reached 658. The total registered capital of these projects was USD10.79 billion reaching half of this year’s target.
FDI project disbursement has been USD7.25 billion so far. It can be considered as a positive result compared with this year’s disbursement value of USD10 billion. However, the total value of targeted disbursement is much smaller than the total registered capital.
Deputy Minister of Planning & Investment, Nguyen Van Trung, has requested all relevant agencies to continue following the Prime Minister’s direction in a bid to review the projects which use much land, energy and pollute the environment as well as projects which have high registered capital but low operating capital and to review investment structure.
According to the Chairman of the Association of Foreign Invested Enterprises, Nguyen Mai, it needs to review the feasibility of each project as well as improve abilities of FDI managers in terms of verifying and assessing the projects in order to limit risks.